Iraqis also are dying at dramatically lower numbers with the war in its sixth year. July saw the lowest civilian toll since December 2005, though a series of suicide bombings this week and rising ethnic tensions in northern Iraq reflect the fragility of the security successes.
An Associated Press tally shows that at least 510 Iraqi civilians and security force members were killed in July, a 75 percent drop from the 2,021 deaths in the same period last year as the U.S. troop buildup aimed at quelling rampant Sunni-Shiite violence was nearing its peak.
The drastic decline in violence over the past year has led to increasing optimism among American commanders, who have been wary of declaring success after past lulls proved short-lived. It also has become a key issue in the U.S. presidential campaign.
"The progress is still reversible," President. But he said a new "degree of durability in gains" should permit him to announce further U.S. troop reductions later this year.
The last of five combat brigades sent as part of the so-called surge returned home in July, leaving about 145,000 U.S. troops in Iraq. That's still higher than the roughly 130,000-135,000 who were here before the troop increase.
But the American soldiers appear to be taking on more of a peacekeeping role after many Sunni and Shiite extremists agreed to stop fighting.
The U.S. military has pointed to a Sunni revolt against al Qaeda in Iraq and a truce by anti-American Shiite cleric Muqtada al-Sadr as playing a large part in the drop in violence, along with the troop buildup and improvements in training Iraqi security forces.
Baghdad - the site of the some of the worst sectarian violence that pushed the country to the brink of civil war - has been turned into a maze of concrete walls and checkpoints that make it difficult for militants to function.
"The key mission for the United States looking forward is to maintain the cease-fires and prevent people from going back to the warpath," said Stephen Biddle, an analyst at the Council on Foreign Relations who has advised the U.S. military command in Iraq.
"Their purpose in Iraq is increasingly changing from fighting a war to keeping a peace," he added in a telephone interview.
Altogether, 10 American fatalities were recorded in July, including six non-combat deaths. The bodies of two American soldiers missing after an attack last year were also found. There were 29 deaths the previous month. By contrast, July 2007 saw 80 deaths, according to AP figures.
The July 2008 figures could rise as the military sometimes announces deaths days after they occur.
"There is a reason to hope that it's going to stay very low," Biddle said, adding the current fighting is focused on "dealing with holdouts rather than trying to break the back of an ongoing insurgency."
Iraqi casualty figures also have declined - despite sporadic high-profile attacks, including female suicide bombings that killed at least 57 people in Baghdad and the disputed northern city of Kirkuk on Monday.
July saw an average of at least 16 Iraqis killed each day compared to 65 each day in the same month last year. It was the third consecutive month this year with relatively lower violence levels for Iraqi civilians.
The change is especially evident at the central morgue in Baghdad, a brick building in a mainly Shiite neighborhood. At the height of the bloodshed, the facility was overwhelmed with the delivery of dozens of bodies on a daily basis. Relatives were afraid to collect the bodies because militiamen controlled the area.
Only 10 to 15 bodies are now received by the morgue each day, down from an average peak of 125, according to the Health Ministry's general-inspector, Adel Muhsin. He said some of the deaths were from natural causes.
"The situation is better now in the morgue," he said. "We received far fewer bodies because of the improved security situation. The current rate is close to any normal country."
Violence has been slower to decline in northern Iraq.
In Mosul on Thursday, a suicide car bomber killed three policemen and a judge died of gunshot wounds. Four bullet-riddled bodies, including three women, also were found in the city a day after an al Qaeda front group warned it was launching a new campaign of violence there.
Nineveh province, of which Mosul is the capital, had 25 percent of the civilian deaths for July, a significantly higher rate than over the past year.
The U.S.-backed Iraqi military, meanwhile, pressed forward with a new operation meant to rout insurgents from rural safe havens in Diyala province south of Mosul and northeast of Baghdad.
Insurgents clashed with U.S.-allied Sunni Arab fighters and killed one of them near the village of Waib, south of the provincial capital of Baqouba.
But nearly 200 suspected militants have been captured since the operation began on Tuesday, Defense Ministry spokesman Maj. Gen. Mohammed al-Askari said.
AP Television News footage on Thursday showed Iraqi troops transferring a handful of detainees in the back of a truck in Diyala. One of the soldiers was seen feeding a slice of orange to a blindfolded captive as others gave them water.
Many Iraqis also were hopeful the low levels of violence could be sustained.
"I am optimistic that the worst has passed and we will not see many bodies in the city anymore. The Iraqi people are no longer interested in continuing the cycle of violence," said Qais Rahim, a 30-year-old Shiite merchant.
But others echoed fears that the relative calm merely reflected a decision by militants to lay low and wait for a chance to regroup.
"The number of bodies has declined, but I think this is a temporary calm because there are sleeper cells ready to resume their killings anytime," said Mustafa Hussein, a 33-year-old engineer from the mainly Sunni Baghdad neighborhood of Azamiyah. "Also, there are militiamen who have fled the country and might return as soon as possible."