In a fresh indication of the housing rebound, construction spending in May was up 5.4% compared with a year earlier, thanks to the highest residential numbers in 4½ years.
The improvement came despite a 1.4% decline in nonresidential construction, the Commerce Department reported Monday, with spending falling off for office buildings and in a category that includes shopping centers.
Total construction rose to a seasonally adjusted annual rate of $874.9 billion in May, an increase of 0.5% over April.
Private residential construction rose 1.2% month-over-month, to the highest level since October 2008.
Public construction rose 1.8%, thanks to gains at the state and local level -- a sign that improving municipal budgets are compensating for the across-the-board federal budget cuts known as sequestration.