WASHINGTON (AP) -- Spending on U.S. construction projects likely rose in March, helped by strong gains in housing.
Economists forecast that construction spending rose 0.6 percent in March from February.
The Commerce Department will release the report at 8:30 a.m. EDT Wednesday.
In February, construction spending increased 1.2 percent to a seasonally adjusted annual rate of $885.1 billion. That was 7.9 percent higher than a year ago.
Residential construction rose in February to the highest level since November 2008. Spending on commercial projects and public building projects also showed gains in February.
For all of 2012, construction spending increased 9.8 percent. That marked the first annual gain after five straight years of declines. Construction spending is still well below healthy levels. But it is slowly coming back, led by a recovery in housing that looks to be strengthening this year and broader economic improvement.
Steady hiring and nearly record-low mortgage rates have encouraged more Americans to buy homes. More people are also moving out on their own after living with friends and relatives in the recession. That's driving a big gain in apartment construction and also pushing up rents.
New-homes sales rose 1.5 percent in March to a seasonally adjusted 411,000. The level was 18.5 percent higher than a year ago.
Sales of previously owned homes slipped in March compared with February. But they are 10.3 percent high than a year earlier.
Gains in home sales are helping to lift housing prices and encouraging builders to ramp up activity.
U.S. homebuilders started work on more than 1 million homes in March at a seasonally adjusted annual rate. That's the first time it has crossed that threshold in nearly five years.
Still, a limited supply of homes for sale could slow the housing recovery's momentum. And many would-be buyers are unable to take advantage of low mortgage rates because banks have imposed tighter credit conditions and are requiring larger down payments.