The department said project starts fell 8.5 percent from December's revised figure of 973,000 starts on a seasonally adjusted annual rate.
The 890,000 starts for January, however, are 23.6 percent more than January 2012, when the rate stood at 720,000.
Disappointment in the number of starts was eased by an increase in permits issued, which indicates a rise in construction in one and two months.
Permits for privately owned housing units rose to a seasonally adjusted annual rate of 925,000, a 1.8 percent gain over December and a 35.2 percent gain over the 684,000 permits issued in January 2012.
Residential project completions came to an annual rate of 724,000 in January on a seasonally adjusted basis, a 6 percent gain over November and a 33.6 percent gain over January 2012, Commerce said in a release issued with the Department of Housing and Urban Development.