Building approvals fell sharply in February, coming in well below expectations, as weakened demand for apartments weighed on the data.
The Australian Bureau of Statistics data showed the number of buildings approved fell a seasonally adjusted 5 per cent to 16,669 in the month.
That compares to an initially reported 17,514 approvals in January, seasonally adjusted.
Bloomberg economists had expected the figures to show a 2 per cent slide in approvals during the month.
Building approvals are now 23.2 per cent higher, seasonally adjusted, than in the same month last year.
In trend terms, building approvals actually gained 0.7 per cent in February, highlighting the volatile nature of the read.
Approvals for private sector houses fell 2.1 per cent in the month, and the 'other dwellings' category, which includes apartment blocks and townhouses, posted a fall of 8.7 per cent.
Falls of this nature are not uncommon, with a similar sized decline observed in November last year.
The decline in February only partially offsets a large 6.9 per cent rise in January.
Still signs home building sector strengthening: economists
JP Morgan economist Tom Kennedy says that although construction of new homes fell five per cent, the breakdown of the figures show the residential construction sector is strengthening.
"If you look at the data over the past few months, there is a clear uptrend in single family dwellings," he said.
"Multi-unit buildings are typically bought by investors, whereas single dwellings are bought by families, so it's a more accurate indication of what is going on at the household level.
"The data does suggest there are signs of life out there in the residential construction sector."
CommSec chief economist Craig James said the housing sector was still much stronger than a year ago.
"We are seeing building approvals, in trend terms, at record highs. We've got activity up 30 per cent compared to a year ago," he said.
"This is very good news for the economy. It shows that housing is taking over the driving seat from the mining sector, and it's good news for builders and developers."
However, Mr James said, the figures will continue to be volatile from month to month.
"If you have a significant rise one month, it's going to have a correction the next month," he said.
Mr James said the recent run of good economic data shows that the chances of another interest rate cut from the Reserve Bank of Australia are "pretty much dead and buried".