By a staff reporter
New home sales hit an 18-month peak in May, raising hopes a recovery in the building sector may assist a wider rebalncing of the economy, according to the Housing Industry Association.
The HIA New Home Sales report shows the total new home sales lifted a seasonally adjusted 1.6 per cent in the month.
Detached house sales posted modest growth of 0.9 per cent on strong gains in three of the five mainland states.
HIA sais detached house sales increased by 4.3 per cent in New South Wales, 8.8 per cent in Victoria, and 6.9 per cent in South Australia.
Detached house sales fell by 2.2 per cent in Queensland and by 10.3 per cent in Western Australia.
Meanwhile, multi-unit sales grew at 5.7 per cent in the month.
HIA chief economist Harley Dale weclomed the upward momentum, saying it was a pleasant turnaround from the "low depths" of 2012.
"A range of housing indicators, including new home sales, suggest Australia experienced modest growth in new residential construction in 2012/13, with some momentum in activity set to carry into the fresh financial year," Dr Dale said.
"That outcome was important, following as it did a sustained period of weakness which saw activity in a majority of markets reach historically very low levels."
Dr Dale said the key moving forward would be to see whether a new home building recovery can be sustained, and at a growth rate sufficient to meaningfully assist the Australian economy with its rebalancing acts.
"We won’t get that required outcome while policy makers continue to assume that super low mortgage rates will do the job all on their own," he said.