NEW YORK (CNN/Money) - Construction spending in the United States held steady in July after two straight months of declines, the government said Wednesday, mostly due to gains in single-family housing and public projects.

The Commerce Department said construction spending edged up in July to an annual rate of $834.1 billion after falling a revised 1.7 percent to $833.8 billion in June. Economists, on average, expected construction spending to fall 0.4 percent, according to Briefing.com.

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The report gave a boost to U.S. stock prices, which were slightly higher in afternoon trading. Treasury bond prices fell.

Spending on residential buildings fell 0.7 percent to $408.6 billion from $411.4 billion in June, while spending on non-residential private construction fell 2.1 percent to $162.1 billion from $165.7 billion in June.

The major boosts to the headline number were spending on single-family houses, which rose 0.4 percent to $262.6 billion from $261.5 billion, and government spending on construction jobs, which rose 0.9 percent to $198.7 billion from $197 billion in June.

"I remain concerned about the rest of 2002," Kenneth Simonson, chief economist for Associated General Contractors of America, said in a note. "I think housing is likely to level off. Private nonresidential construction is unlikely to expand until the economy shows more robust and sustained growth, and public construction is facing further cuts as federal and state budget numbers keep getting more dismal."

Construction spending is a small part of overall gross domestic product (GDP), the broadest measure of economic strength. GDP grew at an anemic 1.1 percent pace in the second quarter of 2002.

GDP shrank for three straight quarters in 2001, evidence of a recession that began in March of last year.

Wednesday's report followed a report from the nation's purchasing managers that manufacturing activity was sluggish for the second straight month in August, hinting that the economy was struggling to gain momentum and continued to be at risk of falling back into recession.