A new motel is under construction in West Homestead, Pa., on Thursday, April 26, 2012. U.S. builders increased their spending on construction projects for a second month in April. A pickup in home construction and commercial projects offset a fifth consecutive decline in government spending. (AP Photo/Gene J. Puskar)
A new motel is under construction in West Homestead, Pa., on Thursday, April 26, 2012. U.S. builders increased their spending on construction projects for a second month in April. A pickup in home construction and commercial projects offset a fifth consecutive decline in government spending. (AP Photo/Gene J. Puskar)
A new motel is under construction in West Homestead, Pa., on Thursday, April 26, 2012. U.S. builders increased their spending on construction projects for a second month in April. A pickup in home construction and commercial projects offset a fifth consecutive decline in government spending. (AP Photo/Gene J. Puskar)
A new motel is under construction in West Homestead, Pa., on Thursday, April 26, 2012. U.S. builders increased their spending on construction projects for a second month in April. A pickup in home construction and commercial projects offset a fifth consecutive decline in government spending. (AP Photo/Gene J. Puskar)
WASHINGTON (AP) ? U.S. builders increased their spending on construction projects for a second month in April. A pickup in home construction and commercial projects offset a fifth consecutive decline in government spending.
Construction spending rose 0.3 percent in April, matching an upwardly revised 0.3 percent March gain, according to data released Friday by the Commerce Department.
The consecutive gains pushed spending to a seasonally adjusted annual rate of $820.7 billion to March. That is 7.6 percent above a 12-year low hit in March 2011. Still, the level of spending is roughly half of what economists consider to be healthy.
Residential construction rose 2.8 percent in April, the best showing in six months, to an annual rate of $256.1 billion. Recent data shows that housing has stabilized after years of weakness following the collapse of the housing boom.
Sales of new homes rose 3.3 percent in April to a seasonally adjusted annual rate of 343,000 units, the second highest level in two years. But the sales rate is still just half of the level that economists consider a healthy sales market.
Builders have grown more confident since last fall, in part because more people are expressing interest in buying a home. In May, builder optimism rose to the highest level in five years, according to a monthly index compiled by the builders' group.
Spending on office buildings was up 1.6 percent in April, while spending on commercial facilities, the category that includes shopping centers, increased 1 percent. Spending on hospitals and other health care buildings climbed 2.6 percent. Those gains helped cushion a small 0.2 percent dip in the overall nonresidential construction category, which edged down to an annual rate of $293.6 billion in April following a big 1.2 percent March increase.
Spending on government building projects fell 1.4 percent to a seasonally adjusted annual rate of $271 billion in April, the lowest level since December 2006. Federal construction was down 5 percent to $26.4 billion at an annual rate while state and local construction spending dropped 1 percent to a rate of $244.6 billion. Governments at all levels have been struggling to deal with huge budget gaps caused by the recession.
The economy grew at an annual rate of 1.9 percent in the first quarter. Residential construction added to growth.
Economists expect the economy is growing between 2 percent and 2.5 percent in the current April-June quarter. They predict roughly the same growth for the rest of the year.
Many analysts forecast that home construction will add to overall growth this year, the first time that has happened in five years. But the contribution is expected to be modest.
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