Construction spending rose a healthy 0.5 percent to a record level in April, as office construction surged and activity in the red-hot housing market hit an all-time high, the government reported Wednesday.

The Commerce Department (search) said the increase pushed building activity to a seasonally adjusted annual rate of $1.066 trillion in April, following gains of 0.6 percent in March and 1.2 percent in February.

The increase reflected a 1.3 percent jump in private nonresidential construction, the best showing since last October, reflecting strength in office building and commercial, the category that includes shopping malls. Residential construction rose 0.6 percent to a record high of $595.6 billion, at an annual rate.

Construction activity has been powered this year by continued low interest rates as the credit-tightening campaign by the Federal Reserve (search) on short-term interest rates has had little impact on long-term rates set by the markets. Low mortgage rates (search) pushed sales of both new and existing homes to record levels in April as housing continued to be the economy's standout performer.

The construction report showed that total private construction rose 0.8 percent in April to a record annual rate of $828.9 billion, following gains of 0.7 percent in March and 1.1 percent in February.

The advance in private building projects included the 1.3 percent rise in nonresidential construction, which totaled $233.3 billion at an annual rate, the highest level since May 2002, and the 0.6 percent rise in residential construction, which rose to an all-time high of $595.6 billion.

Total government construction fell by 0.4 percent to $237.98 billion, reflecting a sharp 7.9 percent drop in federal building projects, to $15.98 billion at an annual rate. This decline offset a 0.2 percent rise in building activity by state and local governments, which rose to a record high of $222 billion in April.