Monthly decline in Australia follows record September, but momentum remains buoyant
Residential construction activity softened in October, with newly built home transactions declining from the previous month’s exceptional levels, according to the latest Housing Industry Association (HIA) survey.
The downturn follows a particularly robust September, yet the underlying picture suggests the housing market has stabilised at elevated volumes.
Sustained interest
The HIA’s monthly assessment of leading builders across Australia’s principal markets revealed that transaction numbers fell during the period.
However, the figure still exceeds typical levels seen over the preceding years, reflecting sustained interest in new construction.
“The volume of new homes sold in Australia fell by 9% in the month of October 2025 but remains at a three-year high,” said Tim Reardon (pictured top), chief economist at the Housing Industry Association. “This monthly decline in new home sales comes off the previous month's three-year high.
“Even so, new home sales in the month of October 2025 remain higher than any month in the recent years, excluding September 2025.”
Positive quarterly trends
Over the three-month period to October, transactions grew substantially year-over-year and reached their strongest position since the middle of 2022.
“Sales in the three months to October 2025 were 8.1% higher compared to the previous quarter, 24.2% higher compared to the same quarter in the previous year and at its highest level since the August quarter 2022,” Reardon noted.
Economists attribute the recent strength to the Reserve Bank's monetary policy adjustments.
“The three cuts to the cash rate have supported market confidence, particularly in the lagging detached housing markets of Sydney and Melbourne,” the economist said. “Supporting factors include favourable employment conditions and inbound migration. This is further supported by low levels of unemployment, strong population growth and rising established home prices.”
Mixed regional performance
The strongest regional performer was Queensland, which recorded a monthly increase. The other major states experienced declines, with Victoria registering the most pronounced contraction, trailed by South Australia, Western Australia and New South Wales, respectively.
Recovery in the previously sluggish markets of New South Wales and Victoria has gathered pace.
“This quarter’s higher volumes were sustained by double-digit percentage quarterly increases in the laggard markets of New South Wales and Victoria,” Reardon explained. “These markets have been slow to respond to rate cuts in the first half of 2025, but it appears that sales here are finally rising sustainably off their troughs.”
Supply issues must be addressed
Looking ahead, the trajectory of construction activity will depend less on demand factors and more on the availability and affordability of building sites.
“With these factors ready to support growth in new home sales, it is increasingly the supply and cost of land that will determine the limit to the rise in sales,” Reardon added. “Lowering the cost of delivering new lots to market will be key to a sustainable increase in new home sales and to house Australia’s existing and growing population.”
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