WASHINGTON, May 1: U.S. construction spending increased more than expected in March, boosted by investment in nonresidential structures, but single-family homebuilding remained depressed amid higher mortgage rates.

The Commerce Department said on Monday that construction spending rose 0.3% in March after declining 0.3% in February.

Economists polled by Reuters had forecast construction spending gaining 0.1%. Construction spending increased 3.8% on a year-on-year basis in March.

Spending on private construction projects rebounded 0.3% after dropping 0.7% in February. Outlays on private non-residential structures like gas and oil well drilling surged 1.0% in March. Non-residential spending is helping to keep business investment barely afloat.

Investment in residential construction fell 0.2%, with spending on single-family housing projects dropping 0.8%. Outlays on multi-family housing projects climbed 0.4%, continuing to be supported by demand for rental housing.

Though residential investment has contracted for eight straight quarters, the longest such streak since the collapse of the housing bubble triggered by the 2007-2009 Great Recession, the pace of decline is slowing. The decline in the first quarter was the smallest in a year.

Spending on public construction projects rose 0.2% after jumping 1.1% in February. Investment in state and local government construction projects increased 0.3%, while federal government construction spending declined 0.7%.