New home sales slow

Sales of new homes took a step backwards in the September quarter 2026, new data shows.

The latest HIA New Home Sales report revealed that sales fell by 17.5 per cent in the quarter, reversing the recovery that commenced in 2025.

All states recorded a decline in new home sales in the September quarter 2026. The largest drop was in Queensland (down 26.3 per cent), followed by Victoria (23.3 per cent), New South Wales (17.4 per cent), South Australia (7.6 per cent) and Western Australia (1.7 per cent).

HIA Chief Economist Tim Reardon observed that despite a small 3.4 per cent increase in September, new home sales remain at their lowest quarterly level in 18 months.

“The recovery in new home sales that followed the interest rate reductions in 2025 has now reversed, with sales in the September quarter now 16.4 per cent lower than a year earlier”, he said, adding that the modest increase in sales in September should not be mistaken for a turning point in the market.

“Industry feedback indicates that display village visits, enquiries, leads and conversions remain very weak.

“The cancelation rate has increased from below 10 per cent early this year to 13.6 per cent in September. A rise in cancelations is typical when interest rates are rising as home buyers that had conditional finance to build a new home, have that finance removed”, Reardon noted.

“There are significant lags between the sale of a new home, building approval and the commencement of construction. The increase in new home sales during late 2025 and early 2026 created a pipeline of work that is only now appearing in the ABS building approvals and commencements data.

“The recent improvement in commencements is welcome, but it should not be mistaken for evidence that the industry has entered a sustained recovery.

“The deterioration in new home sales suggests that the improvement in home building activity will be short-lived unless market conditions improve.

“This is particularly concerning when Australia commenced construction of just 204,500 homes in 2025/26, well below the 240,000 homes required annually to meet the Housing Accord target.

“The underlying shortage of housing has not been resolved. Falling established home prices and rising costs of delivering new homes are making new construction increasingly difficult to justify”, he concluded.