New homes sales rose in February 2024

by | Mar 25, 2024

Home Industry Association logoThe 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.

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

However, despite the increase in February, sales remain around the low levels that occurred in the second half of 2023.

“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,” Mr Reardon said.

“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 report showed new home sales saw a monthly increase in most large states, led by Queensland (+8.4 per cent), followed by New South Wales (+6.5 per cent), Victoria (+6.3 per cent) and Western Australia (+5.0 per cent). South Australia on the other hand saw a 5.5 per cent decline in February.

The report indicated that overall sales in the three months to February 2024 were stronger compared to the previous year in Western Australia (+39.9 per cent), Queensland (+20.4 per cent) and New South Wales (+16.0 per cent). However, declines in overall sales were recorded in Victoria (-7.7 per cent) and South Australia (-13.9 per cent).

Mr Reardon also stated that 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.