WASHINGTON, D.C.: U.S. construction activity gained momentum in February, helped by falling mortgage rates that gave a boost to residential building. However, looming tariffs and trade tensions are beginning to cloud the industry's outlook.

Data released this week by the Commerce Department showed construction spending rose 0.7 percent in February, outpacing expectations and marking a solid recovery from January's downwardly revised 0.5 percent decline.

Economists had forecast a 0.3 percent rebound after a previously reported 0.2 percent dip in January. On a year-over-year basis, construction spending increased by 2.9 percent.

Spending on private construction projects climbed 0.9 percent in February. Residential construction led the way, with a 1.3 percent jump that included a 1.0 percent increase in single-family homebuilding. That rebound followed a period of sluggish growth, as mortgage rates began to ease from their earlier highs.

However, despite the uptick in housing demand, concerns are growing about the cost of building materials, with new tariff threats emerging.

President Donald Trump has launched a new trade investigation that could bring further duties on imported goods, including lumber, a key material in homebuilding.

Builders are already grappling with the impact of earlier trade actions. According to the National Association of Homebuilders, "builders estimate a typical cost effect from recent tariff actions at US$9,200 per home."

Trump has already imposed a 20 percent tariff on Chinese imports and introduced new duties on steel and aluminum. Additional pressure may come from proposed levies on Canadian softwood lumber, widely used in construction and furniture.

In the non-residential sector, investment in structures such as offices and factories increased by 0.4 percent. Spending on multi-family housing units, however, remained flat.

Public construction saw a modest 0.2 percent increase. State and local governments boosted spending by 0.4 percent, while federal project outlays dropped by 1.6 percent.

The latest figures reflect the ongoing balancing act between easing financing conditions and mounting cost pressures. While lower mortgage rates are helping drive demand, rising material costs could weigh on future growth.

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