More Housing Good News: Construction Up

WASHINGTON ( TheStreet) -- An unexpected jump in construction spending in June sent shares of homebuilders rallying in afternoon trading.

The Commerce Department said on Monday that construction spending increased 0.3% during the month, surpassing analysts' forecasts of a 0.5% decline.

The news sent shares of Toll Brothers ( TOL) up 1.6% to $19.87, Pulte Homes ( PHM)grew 3% to $11.70, Centex ( CTX) spiked 4% to $11.32, KB Home ( KBH) grew 3% to $17.20 and Lennar ( LEN) jumped 3% to $12.18.

But results were still 10.2% below last year's level.

Residential construction, which inched up 0.5%, drove the better-than-expected results. Public construction increased 1%, its biggest jump since March, and federal government construction grew 1.9%, the most since December 2008.

This is just another positive in the growing list of good news in the housing sector. Last week the Standard & Poor's/Case-Shiller home price index saw its first monthly increase in three years, new home sales grew 11% in June and existing home sales grew 3.6% during the month.

-- Reported by Jeanine Poggi in New York.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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