WASHINGTON- U.S. construction spending increased more than expected in August as historically low interest rates boosted homebuilding.

The Commerce Department said on Thursday that construction spending jumped 1.4%. Data for July was revised higher to show construction outlays increasing 0.7% instead of edging up 0.1% as previously reported.

Economists polled by Reuters had forecast construction spending gaining 0.8% in August. Construction spending shot up 2.5% on a year-on-year basis.

Spending on private construction projects surged 1.9%, fueled by investment in homebuilding amid record-low mortgage rates and a pandemic-driven migration to suburbs and low density areas. Spending on residential projects accelerated 3.7%, eclipsing a 0.3% drop in outlays on nonresidential construction projects such as manufacturing and power plants.

Spending on public construction projects nudged up 0.1%.

(Reporting by Lucia Mutikani Editing by Chizu Nomiyama) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net))