U.S. construction spending dropped in January to its lowest level in more than four years, according to a government report on Monday, dragged down by the residential slump.

The Commerce Department said spending on construction projects dropped 3.3 percent to a seasonally adjusted annual rate of $986.2 billion, the lowest since June 2004, after tumbling 2.4 percent the prior month.

Analysts polled by Reuters were expecting a 1.5 percent decline in overall construction spending in January. Compared to the same period a year ago, construction spending dived 9.1 percent.

Private residential spending, at the heart of the U.S. economic contraction, fell 2.9 percent in January after December’s 4.4 percent drop. Compared to the same period last year, spending was down 28 percent. The level of spending, at a $291.5 billion rate, was the lowest in over 10 years.

Spending in the non-residential private sector on a range of structures from factories, lodging, offices and power plants fell 4.3 percent in January, versus a 1.2 percent decline the previous month.