Construction spending had its highest increase in six months in October, which could benefit the housing recovery.
According to the U.S. Commerce Department, overall spending was at a seasonally adjusted annual rate of $872.1 billion, a 1.4 percent improvement from the previous month. On a year-over-year basis, spending was up 9.3 percent.
Economists surveyed by Bloomberg called for a median increase of 0.5 percent, with estimates ranging from a 0.5 percent decline to a 1.2 percent improvement.
Additionally, residential construction hit a seasonally adjusted annual rate of $294.1 billion, 3 percent higher than September. This could potentially help the declining inventory of homes on the market.
"We're seeing fairly dramatic improvements in new housing starts and good general housing construction activity over the last several months, and that has really been propelling the overall construction," Ameriprise Financial senior economist Russell Price told Bloomberg.
He added that the improvements in residential construction should be sustainable for the next couple of years.
Although Hurricane Sandy had a devastating effect on the Northeast during October, the Commerce Department said the storm had a minimal impact on construction spending.
