New home sales have lost some of their lustre, as residential construction continues to slow.

Housing Industry Association data shows that new home sales fell 5.3 per cent in February, following two months of gains.

Detached house sales slipped 3.9 per cent, while multi-units sales plummeted 10.6 per cent.

HIA chief economist Harley Dale said the downward trend is becoming more entrenched.


“While the monthly result is a soft one, there is no need to loudly ring alarm bells,” he said.

“New home sales are down, but far from out.”

Over the three months to February 2016, the sale of detached houses increased by 1.8 per cent, while multi-units sales nudged up 0.8 per cent.

Dr Dale warned that key leading housing indicators like new home sales and building approvals would cool this year and next.

“Stage one of a down cycle in new home building will be moderate, but signs of a sharper contraction in subsequent stages may emerge as the year progresses,” he said.

Detached house sales fell by a whopping 12.1 per cent in Queensland in February, and by 7.4 per cent in NSW.