WASHINGTON — Spending on residential housing rose in May to the highest level in 4½ years, helping to send overall construction spending higher despite a big drop in nonresidential activity.
Construction spending rose 0.5 percent in May compared with April when spending was up 0.1 percent, the Commerce Department said Monday.
Private residential construction rose 1.2 percent to the highest level since October 2008, further evidence of a rebound in housing. Spending on nonresidential projects fell 1.4 percent, dragged lower by declines in office building and the category that includes shopping centers.
Public construction rose 1.8 percent with state and local activity up 1.6 percent and federal spending rising 0.6 percent.
Total construction rose to a seasonally adjusted annual rate of $874.9 billion in May, up 5.4 percent from a year ago.
The rise in residential construction reflected a 0.4 percent increase in new single-family construction and a 2.5 percent jump in multi-family construction.
Residential construction spending is 23.1 percent higher than a year ago while nonresidential construction is 0.9 percent below the level of a year ago. Public construction is 4.7 percent lower than a year ago with government activity depressed by tight budgets.
For all of 2012, construction spending increased 9.8 percent. That marked the first annual gain after five straight years of declines. Construction spending is still well below healthy levels although housing is helping to support building activity in the face of the weakness in government projects.
Steady hiring and nearly record-low mortgage rates have encouraged more Americans to buy homes. More people are also moving out on their own after living with friends and relatives in the recession. That's driving a big gain in apartment construction and also pushing up rents.
New-home sales rose 2.3 percent in May to a seasonally adjusted annual rate of 476,000, the highest level in five years, but still below the 700,000 annual rate that is considered healthy by most economists.