Construction spending fell 0.1 percent in January compared to the previous month, the first drop since July, as the commercial and government sectors contracted, the U.S. Commerce Department said Thursday.
Spending fell to a seasonally adjusted annual rate of $827 billion in January. Analysts polled by Bloomberg had expected a median gain of 1 percent.
December's figures were revised downward to a 1.4 percent gain from a previously reported 1.5 percent gain.
Compared to the prior month, residential spending was up 1.6 percent to an annual rate of $260 billion in January, with prviate residential spending rising 1.8 percent to reach the high level in a year, as housing starts increased.
But despite recent gains, homebuilders remain wary. Development of single-family homes has wilted in the face of declining home prices and a glut of unprocessed foreclosures. Multi-family rentals have been more attractive as demand remains high.
Commercial spending fell 0.8 percent to $566.3 billion from the prior month, while private commercial building fell 1.5 percent.
Publicly financed construction was down 0.2 percent to $288.3 billion, compared to the prior month, as federal government cutbacks took effect.