Washington ? Powered by the lowest mortgage rates in four decades, new home construction in January hit the highest level since 1986, the government reported Wednesday.

The Commerce Department said work was started on 1.85 million new single-family homes and apartment units at a seasonally adjusted annual rate last month. That was a 0.2 percent increase from December, when housing construction shot up 4.9 percent from the month before.

By region, housing starts posted the biggest gain in the West in January, an increase of 9.9 percent to an annual rate of 522,000 units. Housing construction was also up in the South.

The other two regions of the country had declines in housing starts. The biggest drop was in the Northeast, where housing starts fell by 16.7 percent to an annual rate of 135,000 units. Construction activity fell by 11.9 percent in the Midwest to an annual rate of 354,000 units.