WASHINGTON (Reuters) -U.S. construction spending unexpectedly rebounded in August, likely lifted by home renovations as higher mortgage rates continued to weigh on single-family homebuilding.

The Commerce Department's Census Bureau said on Monday that construction spending increased 0.2% after an upwardly revised 0.2% gain in July. Economists polled by Reuters had forecast construction spending would ease 0.1% after a previously reported 0.1% dip in July.

Spending decreased 1.6% on a year-over-year basis in August. The report, initially due on October 1, was delayed by a record 43-day shutdown of the federal government. It was the first of the delayed reports to be published, with September's monthly employment report now scheduled for release on Thursday.

Spending on private construction projects rose 0.3% in August. Investment on residential construction increased 0.8%. But outlays on new single-family housing projects dropped 0.4%. Spending on multi-family housing units, which account for a small share of the housing market, rose 0.2%. 

The investment decline in single-family construction suggests renovations were probably the driver of the rise in residential construction.

Mortgage rates have declined from their lofty levels in August as the Federal Reserve resumed its interest rate cuts, data from mortgage finance agency Freddie Mac showed, which could boost construction activity in September.

But mortgage rates have since halted their decline as U.S. central bank officials signaled a reluctance to lower rates again next month. A tepid labor market is also sidelining potential homebuyers, and new housing inventory was elevated in August, which could discourage builders from undertaking new projects.

Investment in private nonresidential structures like offices and factories fell 0.3% in August. Spending on public construction projects was unchanged. State and local government construction spending was also unchanged, while outlays on federal government projects declined 0.8%.