A fall in sales of new homes to a 27-month low is part of a decline that will cut home building by 25 per cent over the coming three years.
Sales of news homes fell by 8.5 per cent in October to their lowest point since July 2014, according to seasonally adjusted figures from the Housing Industry Association on Tuesday.
HIA senior economist Shane Garrett says the figures are not surprising, with the industry heading into a sharp reduction in building volumes over the next couple of years following the "longest and strongest" surge on record.
"Activity is projected to fall to a low point of around 172,000 new dwellings starts during 2018/19, about the same as the average of the past decade," Mr Garrett said.
The latest figures from the Australian Bureau of Statistics show there were 229,404 housing starts in 2015/16, so the HIA forecast, if realised, would mean a 25 per cent fall over three years.