U.S. spending on new construction fell unexpectedly in April, edging down 0.3 percent to its lowest level since December, the government said on Monday.

Construction outlays slipped for the third month in a row to a seasonally adjusted $862.6 billion annual rate in April, the Commerce Department said. Analysts polled by Reuter were expecting a 0.1 percent increase.

The pace of residential construction fell 0.3 percent to $449.9 billion, the sharpest decline in new homebuilding since August.

With interest rates at 40-year lows, housing activity is unlikely to decline dramatically but it may be showing signs of slowing, one analyst said.

"Certainly the bloom is off the rose in terms of rapid growth on the residential housing side," said Wayne Ayers, chief economist at FleetBoston Financial.

New construction on single-family housing slipped 0.8 percent to the lowest level since December.

Non-residential construction fell 2.6 percent to $156.1 billion, as new office and industrial building both fell by more than 7 percent.

The housing market has been one of the few healthy parts of the struggling U.S. economic recovery.

Falling mortgage rates have drawn buyers in record numbers.

Existing home sales rose 5.6 percent in April. Single family home sales climbed 1.7 percent in the month.

The average interest rate for the popular 30-year fixed rate mortgage slipped to a new record low of 5.31 percent last week according to home loan financier Freddie Mac, as uncertainty about the U.S. economy and the possibility of falling prices pushed long-term interest rates down.