Construction spending climbed to a $901 billion annual rate in July, improving by 0.6 percent after a stagnant showing in June. Despite the improvements, July outlays were more than 20 percent lower than the March 2006 peak annual spending rate of $1.2 billion.

Outlays for new homes and commercial buildings buoyed construction spending in July, pushing the annualized spending rate to a level not seen since June 2009, despite continuing declines in the public sector.

Industry spending grew 0.6 from June to July, reaching an annual rate of $901 billion, the Commerce Department said on September 3. The biggest gains came from the business sector, via new office, factory and commercial building projects.

During the first seven months of 2013, construction spending totaled $493.9 billion, 5.6 percent more than the $467.7 billion spent over the same period in 2012.

Private spending on home construction projects also advanced to a seasonally adjusted annual rate of $334.6 billion, the highest level since September 2008. The increase is a strong indicator that builders are still betting on a housing market recovery, despite increases in mortgage rates since May that cut into July's new home sales.

A drop in spending by state and local governments, however, held the industry back. State and local governments, which are responsible for the majority of public construction spending, are feeling the pinch this year from federal budget cuts. Federal construction spending, a smaller fraction of total public outlays, increased slightly in July, and overall public sector spending fell 0.4 percent.