WASHINGTON, Nov 2 (Reuters) - U.S. construction spending increased less than expected in September as gains in investment in private-sector projects were partially offset by a decline in public outlays. The Commerce Department said on Monday that construction spending rose 0.3% in September. Data for August was revised down to show construction outlays advancing 0.8% instead of surging 1.4% as previously reported. Economists polled by Reuters had forecast construction spending rising 1.0% in September. Construction spending increased 1.5% on a year-on-year basis. Spending on private construction projects increased 0.9%, fueled by investment in homebuilding amid record-low mortgage rates and a pandemic-driven migration to suburbs and low density areas. Spending on residential projects increased 2.8%. Outlays on nonresidential construction like gas and oil well drilling dropped 1.5% in September. The pandemic has crushed oil prices, resulting in spending on nonresidential structures contracting in the third quarter. The fourth straight quarterly decline in spending on nonresidential structures bucked a rebound in overall business investment. Spending on public construction projects declined 1.7% in September. (Reporting by Lucia Mutikani Editing by Chizu Nomiyama)