By a staff reporter, with AAP
Building approvals tumbled by almost 7 per cent in June, against analyst expectations of a rise, according to the Australian Bureau of Statistics.
ABS data showed the number of buildings approved decreased a seasonally adjusted 6.9 per cent to 12,778 during the month.
That compares to 13,727 approvals in May, seasonally adjusted.
Bloomberg economists had expected the figures to show a 2 per cent increase in approvals during the month.
Building approvals are now 13 per cent lower, seasonally adjusted, than in the same month last year, against analyst expectations of a flat result.
Approvals for fully-detached houses rose 2.5 per cent in the month.
JP Morgan Australia chief economist Stephen Walters said the figures were soft.
"It's all the in the high density space," he said. "This is the very volatile category where we've seen big rises as recently as April and not much payback in May but we've gotten that in the June numbers."
The Reserve Bank of Australia cut the cash rate four times in 2012 and again in May, and Mr Walters said those reductions are offering some help to the building sector.
"Over the quarter, building approvals were up, so you could argue that perhaps there is a little bit of traction there from the policy stimulus the RBA has been delivering but it is clearly not enough," he said.
"It is a source of anxiety that we're not getting consistent lift here."
Mr Walters is confident the housing construction sector is recovering, it's just that there is no evidence of it from the June quarter building approvals figures.
CommSec economist Savanth Sebastian said the figures were not concerning, even if they sparked speculation about the state of the home building sector.
"It really is a volatile reading," he said.
"There certainly seems to be a lot of conjecture about how well the home building market is going.
"What it really highlights is we've got normal levels of building across the economy.
"It certainly does not mean the sector is collapsing."
Mr Sebastian said he did not believe poor building data was enough of a driver for the RBA to cut rates in August.
"The RBA will certainly be looking at the housing sector very closely, but I don't think these numbers will be the defining reason why the Reserve Bank cuts rates," he said.
However, he said low interest rates were already having a positive impact.
"It's still very early days for the sector, but I think the low interest environment is starting to provide a degree of support for the sector."