The government body elaborated that the biggest reduction since February 2021 is due to a reduction in investment in building single-family homes amid an increase in mortgage rates.
The report said spending on private projects fell 0.6 per cent after falling 1.2 per cent in July, while investment in housing construction fell 0.9 per cent and spending on single family projects fell by 2.9 per cent.
Experts stressed that the aggressive tightening of monetary policy by the US Federal Reserve (FED) and a hike in interest rates weighed on the housing market, with construction and home sales weakening their indices in recent months.
The Fed raised its official interest rate from zero in the previous period to the current range of between 3.00 percent and 3.25 percent.
Meanwhile, data from US mortgage finance agency Freddie Mac indicated that interest rates on 30-year term mortgages averaged 6.70 percent last week, the highest since July 2007.
The Commerce Department report also noted that investment in private non-residential structures such as oil and gas drilling rose 0.1 percent in August, and spending on nonresidential structures fell for five consecutive quarters.
Meanwhile, public construction investment fell 0.8 percent after rising 1.9 percent in July, and construction spending by state and local governments fell 0.4 percent while federal government fell 6.6 percent.