June 1 (Bloomberg) -- Construction spending in the U.S. rose in April by the most since 2000 as demand related to the end of a tax credit spurred builders to break ground on more houses.

The 2.7 percent increase brought spending to $869 billion, after a revised 0.4 percent gain in March that was more than previously estimated, Commerce Department figures showed today in Washington. Economists projected no change for April, according to the median forecast in a Bloomberg News survey.

Sales boosted by a government incentive of as much as $8,000 helped reduce the number of unsold new houses in April to the lowest level in more than three decades, spurring housing starts. While government construction also increased for a second month, spending may be limited by tighter state and local budgets.

“The turn in housing is encouraging,” :S:d1" style="color: #006b99; font-weight: bold; text-decoration: none; ">Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, said before the report. “We’ve cleared away enough new homes inventories that at least we can add some construction. Non- residential construction is still quite weak.”

The gain in April was the biggest since August 2000. Estimates of 53 economists surveyed by Bloomberg ranged from a drop of 1 percent to an increase of 2 percent, after a previously estimated gain of 0.2 percent in March..............read more 

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