August construction spending up 1.4%, led by home building

WASHINGTON (AP) - U.S. construction spending increased 1.4% in August, led by a surge in single-family homes.

The gain was double the 0.7% increase in July, the Commerce Department reported Thursday, and the August gain was better than economists had been expecting. In an additional sign of strength, the government revised higher its earlier estimates for spending in July and June.

Spending on residential construction rose 3.7% ,with a 5.5% rise in spending on single-family homes offsetting a 0.1% dip in apartment construction, a smaller an more volatile sector.

Spending on nonresidential construction fell by 0.3% with hotels, office building and shopping centers all suffering declines.

Total government construction rose a slight 0.1% with spending on highway projects up 1.9%.

'œWhile the outlook for nonresidential and public construction is less certain, the trend in residential should improve further, reflecting strong demand for homes as seen in new and existing home sales,'ť said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.