A drop in building approvals during October won't be enough to spark an interest rate cut, an economist says.

Approvals for the construction of new homes fell 1.8 per cent across Australia during that month, official figures show.  But it followed a strong 16.9 per cent increase in September.

Macquarie Group senior economist Brian Redican said the disappointing data for October would be unlikely to encourage the Reserve Bank of Australia (RBA) to cut rates this month or early next year.

“This data won’t change the RBA’s perspective here,” he said.

“We think they’re marginally on the weaker side but you need several more months of substantially weaker data to change the RBA’s mind.”

Local councils approved the construction of 16,491 new homes, including houses, townhouses and apartments in multi-unit buildings, in October.

That compares to 16,791 approvals in September, seasonally adjusted.

Over the year to October, building approvals were up 23.1 per cent, the Australian Bureau of Statistics said on Monday.

Economists had forecast a fall of 4.5 per cent in approvals for October.

Approvals for private sector houses fell 0.3 per cent in the month, and the ‘other dwellings’ category, which includes apartment blocks and townhouses, was down 2.7 per cent.

JP Morgan economist Tom Kennedy said a fall in building approvals was inevitable after strong rises in recent months.

“We are viewing the building approvals data in a positive light,” he said.

“If you look at a two or three month rolling average, clearly the trend is higher.”

Mr Kennedy said there are signs that the housing sector is picking up and will be a significant driver for economic growth in the future.

“This does add a bit of credence to the theory that the RBA’s interest rate cuts are getting traction, the construction sector is lifting and the housing market in general is turning higher.

“It’s still is early days though, building approvals are still tracking at levels that are probably pretty low, compared to where they should be with the cash rate at 2.5 per cent.