Spending on U.S. construction projects fell less than half as much as forecast in November, reflecting gains in commercial and government building that partially cushioned the slump in residential real estate.

The 0.6% decline followed a 0.4% drop the prior month that was smaller than previously reported, the Commerce Department said Monday. The median estimate of economists surveyed by Bloomberg News was a 1.4% slide.

"Construction still has more room to fall," said Ryan Sweet, an economist at Moody's Economy.com Inc. in West Chester, Pa., who forecast a 0.9% drop. "Home builders are still cutting back and the near-term outlook for public construction has also darkened" as state and local governments face rising deficits.

The median was based on a survey of 48 economists and ranged from declines of 2.5% to 0.3%.

Private residential construction spending fell 4.2%, the most since July, after dropping 2.1% the prior month.

Nonresidential construction, including public projects, increased 1%, and was up 9.2% from a year earlier.

That gain included increases in private construction of power plants and factories that economists say is unlikely to be sustained.

"The lead time for construction projects is long and the credit crunch has not yet had time to make itself felt in full," Ian Shepherdson, the chief U.S. economist at High Frequency Economics LLC in Valhalla, N.Y., wrote in an e-mail to clients. "Sooner or later," commercial-property building "will fall very sharply indeed."

Builders broke ground in November on the fewest new homes since record-keeping began in 1959, according to a Commerce Department report on Dec. 16. Building permits, a sign of future residential construction, also fell to the lowest pace on record.

Barratt American Inc., a builder of new homes in Southern California, on Dec. 24 filed for bankruptcy protection from creditors, along with three affiliates.

Construction spending figures are based on expenditures over the life of a project, with about 75% of value accounted for in the first four months.

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