WASHINGTON (Reuters] – The U.S. Construction spending fell unexpectedly in September due to a decline in expenditures on private and public projects.

According to the Commerce Department, Monday’s drop in construction spending was 0.5%. This follows an increase of 0.1% for August. Reuters polled economists to forecast that construction spending would rise 0.4%.

The September increase in construction spending was 7.8% on an annualized basis. According to the government, gross domestic product increased by 2.0% per annum in September. This decrease is from the 6.7% pace recorded in April-June.

After falling 0.3% in August, September saw a 0.5% decrease in spending on private projects. The 0.4% drop in residential construction expenditures was due to an increase of 0.1% in August. Spending on single-family homes fell 0.6%, while outlays for multi-family housing projects dropped 0.3%.

Housing construction is being held back due to shortages of building materials and high costs. The third quarter saw residential investment contract for the second consecutive quarter. This was due to a decline in single-family homebuilding and home improvement.

In September, 0.6% of private construction projects other than residential like drilling for oil and gas fell. The July-September quarter saw a decrease in spending on structures, mainly due to healthcare and commercial structures.

After increasing by 1.2% in August, spending on public projects fell 0.7% in September. Spending on projects of state- and local governments fell by 0.4%. Federal spending plummeted 4.3%.