U.S. construction spending surged 1.8 percent to a record high in April as home building rose by the largest amount in 24 years.
The April gain reversed a 1.7 percent drop in March, the Commerce Department reported Friday. The strength stemmed from a sizable 4.5 percent rise in residential construction, the biggest percentage gain since November 1993. Non-residential construction rose by a more modest 0.8 percent while spending on government projects fell 1.3 percent as both the federal government and state and local governments saw declines.
The overall gain pushed construction to an all-time high of $1.31 trillion at a seasonally adjusted annual rate, 7.6 percent above the level of a year ago. Construction is expected to provide a healthy contribution to economic growth this year.
The gain in home construction marked a rebound from a 2.6 percent drop in March and was driven by a 3.6 percent jump in the volatile apartment sector. Spending on single-family homes was flat in April. But the overall level of residential spending was the highest since October 2006. The increase in nonresidential spending included a 3 percent rise in spending on hotels and motels and a 1.8 percent rise in office building.
The weakness in government spending reflects in part tight budgets at all levels of government. State and local construction spending edged down 0.3 percent, while spending by the federal government dropped 10.2 percent.