Sales activity in new homes across Australia was smashed by lockdowns across several states in July albeit with the pipeline of new home construction remaining strong, the latest data suggests.

In its latest report, Housing Industry Association said that sales of off-the-plan or newly constructed homes declined by 20.5 percent during the month of July.

Victoria led the decline as the volume of sales slumped by 32.2 percent during the month.

This was followed by South Australia (down 29.4 percent), Queensland (down 25.4 percent) and New South Wales (down 14.8 percent).

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

Whilst sales of new homes had been expected to drop back following the winding up of HomeBuilder, HIA Economist Tom Devitt said the July result was driven by lockdowns and the closure of display homes across several states.

“With lockdowns in multiple states restricting trade and eroding confidence, it is not surprising that fewer people were able to visit display homes,” he said.

Despite this Devitt stresses that the level of new home sales over the past three months has been higher compared with the same period in 2018 – which was a relatively strong year for new home buildings.

Moreover, he points out that the pipeline of work remains strong with a record number of new homes now under construction throughout the country.

“This solid level of sales following the end of HomeBuilder suggests that demand for detached housing remains robust despite the poor result in July,” Devitt said.

“Low interest rates and changes in consumer preference for location of housing have been the major drivers for activity following the end of HomeBuilder.

“ABS housing finance data and approvals data indicate that the bulk of projects initiated by HomeBuilder have cleared the final regulatory hurdles. There is now a record number of homes under construction across the country.”

Devitt said data over the coming months will indicate whether or not the July result will be an anomaly or whether lockdowns have impaired consumer confidence.