WASHINGTON (AP) — U.S. construction spending rose slightly in March, fueled by increases for apartments, single-family homes, factories, health care centers and office projects.

The Commerce Department said Thursday that construction spending increased just 0.2 percent in March after having fallen 0.2 percent in February. The March gains put construction at a seasonally adjusted annual rate of $942.5 billion, an 8.4 percent increase year-over-year.

Construction spending dipped in January with the harsh winter weather and continues to run below its December 2013 levels.

Apartment construction spending increased 4.3 percent in March, while single-family home spending inched up 0.2 percent. Residential construction spending is at its strongest pace since May 2008, nearly five years ago.

Spending on government projects fell 0.6 percent, including a 2.3 percent drop for schools and educational buildings.

Despite the gains in residential construction, warmer weather has yet to produce much of a rebound for residential real estate.

Builders started work on 946,000 homes at a seasonally adjusted annual rate in March, up 2.8 percent from 920,000 in February, the Commerce Department said last month.

Applications for permits, a gauge of future activity, fell 2.4 percent to a seasonally adjusted annual rate of 990,000.

Sales of new homes declined 14.5 percent in March to a seasonally adjusted annual rate of 384,000. That was the second straight monthly decline and the lowest rate since July 2013. Sales have declined 13.3 percent over the past 12 months.

New-home buying plunged in the Midwest, South and West in March. But they picked up in the Northeast, where snowstorms in previous months curtailed purchases.

The National Association of Home Builders/Wells Fargo builder sentiment index was 47 in April. Readings below 50 indicate that more builders view sales conditions as poor rather than good.

Sales have also been modest because of affordability issues.

Rising prices over the past year and higher mortgage rates have made it harder for many Americans to afford a home. Real estate data provider CoreLogic says home prices rose 12.2 percent in the past year. Wage growth last year failed to keep pace with the higher buying costs.

The average rate on a 30-year mortgage was 4.33 percent last week. Rates surged about 1.25 percentage points from May through September, peaking at 4.6 percent. Those increases began after the Federal Reserve signaled that it would begin to pull back from its bond-buying program.

Those Fed bond purchases were designed to keep long-term interest rates low to spur more borrowing and boost economic growth. Since December, the Fed has reduced the size of its monthly purchases to $45 billion from $85 billion.