WASHINGTON—
U.S. construction spending rose more than expected in May as a severe shortage of homes for sale boosted spending on single-family homes.
The Commerce Department said Monday that construction spending rose 0.9% after increasing 0.4% in April.
Economists polled by Reuters had expected construction spending to rise 0.6%. Construction spending advanced 2.4% year-on-year in May.
Spending on private construction projects rose 1.1%, with investment in residential construction rebounding 2.2% after falling 0.9% the previous month. Private construction spending had increased 0.4% in April. Spending on single-family home projects accelerated 1.7% in May.
Although the housing market has been hit hardest by the Federal Reserve's most rapid monetary policy tightening cycle since the 1980s, an acute shortage of single-family homes available for sale is driving construction. Home construction skyrocketed in May.
The construction spending report showed that spending on multifamily housing projects fell 0.1% in May.
Spending on non-residential private structures, such as oil and gas well drilling, fell 0.3%.
Spending on public construction projects rose 0.1% after increasing 0.5% in April. State and local government spending increased 0.4%, while federal government spending fell 2.5%.