Building approvals plunged in September, falling well short of expectations, official data shows.
The Australian Bureau of Statistics data showed the number of buildings approved fell a seasonally adjusted 11 per cent to 15,004 in the month.
That compares to 16,810 approvals in August, seasonally adjusted.
Economists surveyed by Bloomberg expected a 1 per cent fall in building approvals during the month.
Over the 12 months to August, building approvals were down 13.4 per cent, the Australian Bureau of Statistics said.
Approvals for private sector houses fell 2.3 per cent in the month, while private sector dwellings excluding houses, which includes apartment blocks and townhouses, tumbled 21.9 per cent in seasonally adjusted terms.
On the plus side, most of the fall came from the high-density dwelling category, which is typically volatile and not as important to the economy as stand-alone houses, JP Morgan economist Tom Kennedy said.
"It's a lot weaker than we had expected but if you're looking for the good news, it's that the bulk of the weakness was in the high-density component," Mr Kennedy said.
"That category is often volatile and is prone to having large downturns and large spikes.
"We think it's more or less an aberration and we think we'll see it bounce back in the next few months.
"It's not a good number but it's probably not as alarming as the headline would suggest."
Mr Kennedy said low interest rates and the booming property market should keep building activity strong going forward.
Local councils approved the construction of 15,004 new homes in September, according to the Australian Bureau of Statistics figures on Monday.
CommSec chief economist Craig James believes the housing market is stabilising after a series of strong results.
"Approvals have flattened out at these sorts of levels and they're relatively high levels," he said.
"We're not seeing any signs of oversupply, which would be the case if approvals kept on going up."
Mr James said it's too early to tell what the stabilisation in building approvals will have on house prices, which rose by 10 per cent in 2013/14.
"We'll have to wait and see when the housing supply ends up coming onto the market, there can be a degree of lumpiness that goes with these sorts of things," he said.
"I think the fact that we're seeing a flattening out of approvals, rather than going through the roof or going through the floor, is encouraging."