WASHINGTON (Reuters) - U.S. construction spending unexpectedly fell in January, pulled down by a decline in outlays on multi-family homebuilding.

The Commerce Department's Census Bureau said on Monday that construction spending dropped 0.2% after an unrevised 0.5% increase in December. Economists polled by Reuters had expected construction spending would be unchanged. Construction spending increased 3.3% on a year-on-year basis in January.

Spending on private construction projects slipped 0.2%. Investment in residential construction declined 0.4%, but outlays on new single-family projects rose 0.6%.

Higher mortgage rates remain a constraint, a situation that could be worsened by looming additional tariffs on lumber as well as duties on other imports like appliances. There is also an excess supply of unsold houses on the market amid weak demand.

President Donald Trump has ordered a new trade investigation that could heap more tariffs on imported lumber, adding to existing duties on Canadian softwood lumber and 25% tariffs on all Canadian and Mexican goods due on Tuesday.

Outlays on multi-family housing units dropped 0.7% in January. Spending on home renovations continued to rise.

Investment in private non-residential structures like offices and factories was unchanged in January.

Spending on public construction projects ticked up 0.1%. State and local government spending dipped 0.1%, while outlays on federal government projects surged 3.2%.