Building approvals fell in March, against expectations of an increase, official data shows.
The Australian Bureau of Statistics data showed the number of buildings approved fell a seasonally adjusted 3.5 per cent to 15,958 in the month.
That compares to an initially reported 16,669 approvals in February, seasonally adjusted.
Economists surveyed by Bloomberg had expected the figures to show a 1.5 per cent lift in approvals during the month.
Building approvals are now 20 per cent higher, seasonally adjusted, than in the same month last year, against expectations of a 31 per cent lift.
Total building approvals have declined in five of the past six months, driven by sharp falls in approvals for high density living.
Housing strength to drive growth: economists
Commonwealth Bank senior economist Michael Workman said the housing construction sector looks ready to be the main driver the Australian economy when mining investment winds down.
"There is still a significant boost coming to construction and spending which will help offset the winding down of resources investment from its recent peak," he said.
"Non-residential construction approvals are also trending higher, thanks to strong interest in new CBD commercial developments."
Mr Workman said the strength in housing will help employment growth and flow into other sectors of the economy.
"We expect to see sharp rises in the construction activity data in coming quarters," he said.
"It should also flow into higher spending at big box retailers as the new dwellings are kitted out."
JP Morgan economist Tom Kennedy said the weakness in the home building approvals is almost entirely attributable to a larger than expected decline in the volatile high density approvals.
"Detached dwelling approvals were more encouraging, with the number of approvals stabilising at elevated levels and consolidating the gains made earlier in the quarter," he said.
"High density approvals have been a consistent drag on the headline data in recent months."
Approvals for private sector houses fell 0.7 per cent in the month, and the 'other dwellings' category, which includes apartment blocks and townhouses, was down seven per cent, the seasonally adjusted figures from the Australian Bureau of Statistics showed.
Housing Industry Association chief economist Harley Dale said home building will be a major boost for the economy in 2014.
"If you're searching for highlights to the Australian economy, new housing is the best shot you can take, he said.
"The momentum in approvals has slowly shifted from multi-units to detached houses and that is evident in the March quarter results," he said.
"That having been said, multi-unit approvals hit a record high in the December quarter last year.
"How many of these approvals are converted into dwelling commencements and over what timeframe will exert a considerable influence over wider domestic economic activity."