Construction spending boosted by government projects

Construction spending unexpectedly rose 0.1 percent in June, propelled by an increase in public construction spending.

The 0.1 percent increase is 7.9 percent below the June 2009 estimate of $907.7 billion, according to Commerce Department figures released Monday. May figures were revised and showed a 1 percent drop that was larger than expected.

During the first six months of 2010, construction projects are 11.2 percent below the same period last year.

Government spending on construction was up 1.5 percent, to $308.4 billion, with highway construction coming in 0.1 percent above the May estimate.

Spending on private construction came in at $527.6 billion, or 0.6 percent below the revised May estimate of $530.9 billion.

Residential construction fell 0.8 percent in June while nonresidential construction dropped 0.5 percent below the revised May estimate of $270.6 billion.

The sale and building of new homes has been sluggish since the April 30 expiration of a federal homebuyers tax credit.

Analysts have emphasized that the job market will need to pick up significant steam to provide a boost to the sluggish housing market.

Former Federal Reserve Chairman Alan Greenspan said a decline in home prices could further stymie the economic recovery and put the nation in jeopardy of a double-dip recession.

"Home prices, as best we can judge, have really flattened out in the last year," Greenspan said. "And while it is true that most economists expect a small dip from here, largely as a consequence of the ending of the tax credit, the data don't show that at this particular stage. If home prices stay stable, then I think we will skirt the worst of the housing problem," he said during a Sunday interview on NBC's "Meet the Press."