How to resolve AdBlock issue? HIA reports ‘new home sales slump’
NEW HOME sales fell by 17.5% in the September quarter this year, reversing the recovery that began in 2025 according to Housing Industry Association (HIA) chief economist, Tim Reardon.
“Despite a small 3.4% increase in September, new home sales remain at their lowest quarterly level in 18 months,” Mr Reardon said.
All states recorded a decline in new home sales in the September quarter 2026. The largest decline was in Queensland (-26.3%), followed by Victoria (-23.3%), New South Wales (-17.4%), South Australia (-7.6%) and Western Australia (-1.7%).
“The recovery in new home sales that followed the interest rate reductions in 2025 has now reversed, with sales in the September quarter now 16.4% lower than a year earlier.
“This deterioration has occurred amid higher interest rates, increased taxes and broader economic uncertainty.”
The HIA New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.
Other factors at play
Mr Reardon warned that other factors, such as mortgage interest rate increases, would also add weight to the prevailing declines.
“It is also likely that the increase in the cash rate in the month of September 2026 will further weigh on new home sales,” Mr Reardon said.
“The modest increase in sales in September should not be mistaken for a turning point in the market. Industry feedback indicates that display village visits, enquiries, leads and conversions remain very weak.
“The cancelation rate has increased from below 10% early this year to 13.6% in September. A rise in cancelations is typical when interest rates are rising as home buyers that had conditional finance to build a new home, have that finance removed,” he said.
“There are significant lags between the sale of a new home, building approval and the commencement of construction. The increase in new home sales during late 2025 and early 2026 created a pipeline of work that is only now appearing in the ABS building approvals and commencements data.”
Beware of false dawns
Mr Reardon welcomed the recent improvement in housing commencements, but warned of a 'false dawn' that “should not be mistaken for evidence that the industry has entered a sustained recovery".
“The deterioration in new home sales suggests that the improvement in home building activity will be short-lived unless market conditions improve,” Mr Reardon said.
“This is particularly concerning when Australia commenced construction of just 204,500 homes in 2025/26, well below the 240,000 homes required annually to meet the Housing Accord target.
“The underlying shortage of housing has not been resolved. Falling established home prices and rising costs of delivering new homes are making new construction increasingly difficult to justify.
“Putting the industry through another boom-bust cycle will only make it harder and more expensive to increase housing supply when market conditions recover,” he said.
“Higher interest rates will not build more homes. Nor will increasing the tax and regulatory burden on new housing.
“Without reforms that reduce the cost of delivering new homes, Australia will continue to move further away from achieving its Housing Accord target,” Mr Reardon said.
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