In February, the U.S. experienced a higher-than-expected increase in construction spending as a result of lower mortgage rates, especially boosting single-family homebuilding. The Commerce Department's Census Bureau reported a 0.7% rise in construction spending, following a revised 0.5% decline in January. Economists, who were surveyed by Reuters, had predicted a 0.3% rebound in construction spending compared to the previously reported 0.2% decrease in January.

In February, construction spending saw a 2.9% year-on-year increase, with private construction projects growing by 0.9%. Residential construction investment surged by 1.3%, particularly in new single-family projects which saw a rebound of 1.0%.

While mortgage rates have decreased since the beginning of the year, concerns remain due to tariffs on imported goods affecting builders. President Donald Trump initiated a new trade investigation that could lead to additional duties on imported lumber, in addition to existing taxes on Canadian softwood lumber, which is widely used in construction and other industries.

Trump has also imposed tariffs on Chinese goods and on steel and aluminum. The National Association of Homebuilders has estimated that recent tariff actions could add around $9,200 to the cost of a typical home. Spending on multi-family housing units remained steady in February, while investment in private non-residential structures, such as offices and factories, increased by 0.4%.

Public construction projects saw a 0.2% increase overall in spending, with state and local government spending rising by 0.4%, although federal government project spending declined by 1.6%.

Lucia Mutikani reported on this data, which was edited by Andrea Ricci.