Housing construction in April climbed to its highest level in a year, the government said yesterday, as economists expressed optimism that declining interest rates will spark renewed momentum throughout the economy.

The Commerce Department said new housing was constructed at a seasonally adjusted annual rate of 1.91 million units last month, as a continued surge in apartment building offset a slight decline in single-family construction.

The 1.6 percent April increase followed a much larger 14.3 percent gain in March. Both increases helped to push construction activity to its highest level since April 1984.

Since spring of last year, housing activity dropped by about 20 percent as rising mortgage rates dampened home buyers' enthusiasm. But mortgage rates have dropped considerably from their peak in July of 15.2 percent for fixed-rate loans.

With one major bank cutting its prime lending rate to 10 percent Wednesday, the lowest level in 6 1/2 years, many analysts expect mortgage rates and other interest rates to head lower still.

At the White House, spokesman Larry Speakes said "prospects for continued growth in the housing industry were boosted" with the action by Bankers Trust Co. of New York, the nation's eighth-largest bank, to lower its prime rate.

Many private analysts are counting on further interest rate declines to help spur growth in other segments of the economy, particularly the depressed industrial sector.

Meanwhile, the Federal Reserve Board said the operating rate at the nation's factories, mines and utilities fell 0.5 percentage point in April to 80.6 percent.

It marked the fourth month out of the past five that operating capacity has declined, reflecting the general slowdown in the U.S. economy. Overall growth dipped to an annual rate of 1.3 percent for the first three months of the year, the lowest level since the end of the last recession.

David Berson, an economist for Wharton Econometrics, said the growth in housing construction, compared with the slump in industrial activity, showed the opposing influences in the economy.

"We have a real split right now between production and the demand side," he said. "Things like housing on the demand side are doing well, but the production segment is doing very poorly because of the high value of the dollar."

James Christian, chief economist for the U.S. League of Savings Institutions, said further declines in mortgage rates will spur construction and sales in coming months, with the increased activity in the building industry likely to filter through to the rest of the economy.

Warren Lasko, executive vice president of the Mortgage Bankers Association, said fixed-rate mortgages had dropped to about 12.75 percent and could go as low as 12.25 percent in coming months.

"Interest rates are clearly on the decline, reflecting the weakness in the economy and the good news on the federal budget in Congress," he said.

The housing report said construction of single-family homes edged down 1 percent in April to an annual rate of 1.16 million units, following a 3.2 percent March increase.

However, construction of apartments with five or more units rose 6.4 percent in April following a giant 45.7 percent March surge.

Construction of apartments with four or fewer units rose a more modest 2.8 percent in April following a 10.4 percent March gain.

While current construction rose in April, issuance of new building permits, usually a good sign of future building activity, declined 4.9 percent following a 7.2 percent March increase.