U.S. construction spending for commercial and residential projects rose to a record in January, according to the Census Bureau.

Construction outlays totaled $1.369 trillion at a seasonally adjusted annualized rate, 1.8% higher than an upwardly revised $1.346 trillion in December. January’s gain was the biggest monthly increase in almost two years.

Private residential construction rose to an annualized and seasonally adjusted rate of $554.8 billion, the highest since May, after gaining 2.1% from the previous month.

Despite the increase, a measure of homebuilder sentiment, the Housing Market Index, indicates confidence slipped during the month as labor and supply constraints continued to concern the nation’s homebuilders.

The index slipped one point in January to 75, according to the National Association of Home Builders and Wells Fargo.

“With the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020,” said NAHB Chief Economist Robert Dietz. “However, builders continue to grapple with a shortage of lots and labor while buyers are frustrated by a lack of inventory, particularly among starter homes.”

A related confidence index measuring current sales conditions for builders fell to 81 points in January, while buyer traffic grew to 58 points and sales expectations over the next six months held its ground at 79 points.

Although overall sentiment weakened in January, NAHB Chairman Greg Ugalde said construction growth is likely to come in the months to come.

“Low-interest rates and a healthy labor market combined with a need for additional inventory is setting the stage for further home building gains in 2020,” Ugalde said.