U.S. construction spending (search) fell an unexpected 1.7 percent in May, the biggest drop in a year, a government report showed on Tuesday, as spending on residential construction (search) fell to its lowest level since November.

Construction outlays fell to a seasonally adjusted $869.8 billion in May, the Commerce Department (search) said. Analysts polled by Reuters had been expecting a 0.4 percent increase.

Residential construction fell 0.9 percent, the third consecutive monthly decline, to a seasonally adjusted annual rate of $445.4 billion. Nonresidential construction fell 0.4 percent and public construction slid 1.8 percent.