U.S. construction spending increased less than expected in December as a solid rise in private projects was partially offset by a sharp decline in outlays on public projects.

The Commerce Department said on Tuesday that construction spending rose 0.2% after advancing 0.6% in November.

Economists polled by Reuters had forecast construction spending gaining 0.6%. Construction spending increased 9.0% on a year-on-year basis in December. It rose 8.2% in 2021.

Spending on private construction projects rose 0.7% in December. Outlays on residential construction surged 1.1%.

Single-family homebuilding spending accelerated 2.1%, while outlays on multi-family housing projects rose 0.4%.

Homebuilding remains constrained by higher prices for building materials, especially framing lumber. The United States last November nearly doubled the duties on imported Canadian softwood lumber to 17.9% from 9% after a review of its anti-dumping and countervailing duty orders. Residential investment contracted for a third straight quarter in the fourth quarter.

Investment in private non-residential structures like gas and oil well drilling was unchanged in December. Spending on structures also dropped for a third straight quarter in the October-December period.

Spending on public construction projects dropped 1.6% in December. Outlays on state and local government construction projects declined 1.3%, while federal government spending tumbled 5.4%.