WASHINGTON, (Reuters) – The U.S. construction sector saw a modest increase in private spending in March. However, this was partly offset by a continued decline in public spending.

According to the Commerce Department, construction spending increased 0.1% Monday after rising 0.5% in February. Reuters polled economists to predict that construction spending will increase 0.7%. On a year on year basis, March saw construction spending rise 11.7%

According to the government, last week’s first quarter GDP contraction was 1.4% per annum due to record-breaking imports. While residential construction investment increased last quarter, nonresidential spending like oil well drilling declined for the fourth consecutive quarter.

After rising by 0.7 in February, March saw 0.2% growth in spending on private projects. Residential construction investment increased by 1.0%. Spending on single-family homes increased 1.3% while spending on multifamily housing decreased 0.5%.

The strong housing demand has fueled residential construction. However, momentum is slowing as the 30-year fixed rate mortgage rates are above 5%.

The March decline in investment in private, non-residential structures was 1.2%. After dipping 0.1% by February, spending on public projects decreased 0.2%. Spending on construction projects by the state and local government has declined 0.5%, despite a 2.4% increase from federal government spending.