New home sales increased in January after falling in December, according to the Housing Industry Association.
The volume of new home sales lifted by 0.5 per cent in the month, with sales of new detached houses increasing by 0.3 per cent and multi-unit sales rising by 1.6 per cent, the body found.
New home sales lifted by 17 per cent when compared with the same month last year.
HIA senior economist Shane Garrett said new home sales resumed their growth trajectory in January, after a small decline in December.
"New home sales have been rising pretty steadily since the third quarter of 2012, encouraged by the falling interest rates and the return of confidence to the housing market," Mr Garrett said.
Mr Garrett said the body has lifted its forecasts for new home commencements for 2014.
The group expects 165,600 commencements this year, followed by 168,000 in 2015, and stronger sales activity in coming years.
But Mr Garrett warned the new home sales recovery had not helped all states.
New private detached house sales lifted by 10.9 per cent in Victoria and 0.4 per cent in Queensland in January, with falls of 6.9 per cent South Australia, 6.4 per cent in New South Wales and 1.9 per cent in Western Australia.