Australia needs a housing sector that's booming, but at the moment it's halfway between boom and bust - and even worse for the rest of the building industry.

The value of residential building approvals, including alterations and additions, dropped by 16 per cent in September, according to seasonally adjusted figures from the Australian Bureau of Statistics.

In the process, home building approvals hit their lowest point since July 2013.

Approvals for other buildings – shops, offices, hotels and the rest – rose by five per cent, but that was only enough to make up for a fall of the same size in August.

Together, both categories of approvals were down nine per cent in the month.

Monthly figures are volatile so need to be treated with caution, but the picture emerging from the data recently is looking increasing bleak.

With the mining investment boom winding down, the economy needs other sectors to step into the breach.

That’s the so-called “rebalancing”, which – as its name suggests – economists are conditioned to expect to happen automatically.

But this handover isn’t going very smoothly.

Relative to gross domestic product (GDP), the value of building approvals over the September quarter was below the average of the previous 25 years, thanks mainly to weakness in the non-residential sector.

But even housing approvals were below their 25-year average in the quarter.

And that quarter century spans the building slumps of 1990-92, 1995, 2000, 2009 and 2012, as well as the booms in between.

The total value of approvals in September was $6.67 billion.

Just to get back to its long-run average, in the no-man’s land between boom and bust, the monthly value of approvals would have to rise by 17 per cent, or $1.1 billion a month, to $7.79 billion a month.

But the building industry needs to do a lot more than that to make sure the baton change isn’t fumbled.

By Garry Shilson-Josling