WASHINGTON (Dow Jones)--U.S. construction spending unexpectedly tumbled in July as outlays for housing plunged, the government said Tuesday.

Total spending decreased by 0.4% at a seasonally adjusted annual rate of $1.169 trillion, the Commerce Department said. Spending rose 0.1% in June; originally, June spending was seen 0.3% lower.

Wall Street had expected July construction spending would be flat. The 0.4% fall was the largest decline since a drop of 0.6% in January 2007.

Residential construction spending decreased in July, down by 1.4% to $541.9 billion. Residential spending decreased 0.4% in June; it was originally seen down 0.7% for the month. Year over year, residential was 15.6% lower in July.

Non-residential construction spending rose by 0.6% in July. Outlays climbed for churches and schools, but fell for roads.

Private-sector construction spending during July fell 0.7% to $880.1 billion. Spending went 0.2% lower in June.

Public, or government, construction spending increased 0.7% to $289.0 billion. June outlays rose 1.0%. Federal government construction outlays dropped by 0.4%, but state and local spending - much larger than federal spending in dollars - increased 0.8% to $269.6 billion.

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