“Sales of new homes nationally increased by 5.3% in the month of February 2024, from very low levels,” stated HIA Chief Economist, Tim Reardon.

The HIA New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.

“Despite the increase in February, sales remain around the low levels that prevailed in the second half of 2023,” added Mr Reardon.

“The slowdown in sales is caused primarily by the rise in the cash rate which has eroded the capacity of households to borrow and impaired market confidence.

“The slowing in sales and building approvals will flow through to a decade low volume of new houses commencing construction in 2024. The economic impact of this slowdown will become increasingly evident in 2024, as employment in the home building industry falls.

“The higher borrowing costs are compounding the elevated cost of land and construction, drying up the pipeline of new home building work despite the significant pent-up demand for housing.

“The increase in sales in February was observed in most of the large states. Given the weakness of January data, it is not all too surprising to see an uptick in February,” concluded Mr Reardon.

New home sales saw a monthly increase in most large states, led by Queensland (+8.4%), followed by New South Wales (+6.5%), Victoria (+6.3%) and Western Australia (+5.0%). South Australia saw a 5.5% decline in February.

Sales in the three months to February 2024 were stronger compared to the previous year in Western Australia (+39.9%), Queensland (+20.4%) and New South Wales (+16.0%). Declines were recorded in Victoria (-7.7%) and South Australia (-13.9%).