Construction spending, driven by a rise in public projects, fell only 0.6% in July to a seasonally adjusted annual rate of $1,084.4 billion, 4.8% below July 2007, the Commerce Department reported Tuesday morning.

Residential construction spending, however, continued in freefall, declining 2.3% from June to an annual rate of $357.8billion, a whopping 27.5% below the pace for July 2007.

Private construction was down 1.4% from June to a rate of $774.6 billion, 9.2% off last year's pace.

Public construction spending was up 1.4% to a rate of $309.7 billion, driven in part by a 2.5% increase in educational construction to a seasonally adjusted annual rate of $87.4 billion and flat spending on highway construction, which remained at $76 billion.