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Construction spending falls in January

Construction spending declined in January by 0.7 percent compared to December.

Construction spending declined in January by 0.7 percent compared to December.

Construction companies largely kept money in their pockets last month as spending declined for the most part.

According to the U.S. Census Bureau, construction spending in January ended at a seasonally adjusted annual rate of $792 billion, down 0.7 percent from December when it was $798 billion. Compared to January 2010, the rate is down 6 percent.

Single-family construction spending slightly increased in January, but compared to the same month in 2010, it's down 6.7 percent and down 77 percent compared to 2006, when families moving into new homes was more commonplace.

Despite the drop, the U.S. Commerce Department remains optimistic that 2011 will see better times for the real estate market, as personal income increased 1 percent, exceeding expectations.

"Personal income surged in January, largley as a result of the Middle Class Tax Relief Act that the president signed in December," said Mark Doms, the Commerce Department's chief economist. "By lowering employee contributions for social security, workers have more take-home pay. This increased spending capacity should boost the U.S. economy and employment in 2011."