WASHINGTON—U.S. construction spending unexpectedly fell in September amid declines in outlays on both private and public projects. The Commerce Department said on Monday that construction spending dropped 0.5 percent after edging up 0.1 percent in August. Economists polled by Reuters had forecast construction spending gaining 0.4 percent. Construction spending increased 7.8 percent on a year-on-year basis in September. The government reported last week that gross domestic product increased at a 2.0 percent annualized rate, stepping down from the April-June’s robust 6.7 percent pace. Spending on private construction projects decreased 0.5 percent in September after falling 0.3 percent in August. Outlays on residential construction dropped 0.4 percent after nudging up 0.1 percent in August. Single-family homebuilding spending declined 0.6 percent and outlays on multi-family housing projects slipped 0.3 percent. Shortages and more expensive building materials are holding back homebuilding. Residential investment contracted for a second straight quarter in the third quarter, …