Population growth and low unemployment continue to support housing demand
New home sales rose in March, increased by 17% in the month despite the rise in the cash rate and fuel prices, according to a monthly Housing Industry Association (HIA) report that is widely watched as an early signal for future detached-house building activity.
“Sales of new homes have been increasing since early 2025 and the disruptions of the past two months have not stopped this momentum, with sales for the March quarter 31.9% higher than at the same time last year,” said Tim Reardon, chief economist at the Housing Industry Association. “This is a strong result given the impact of two rate increases and heightened global uncertainty.
“This likely reflects the strength of the recovery that was underway prior to the increase in rates and the strong growth in established home prices over the past year.”
Private new house sales - Australia (seasonally adjusted) 
Source: HIA Economics
For Reardon (pictured right), the growth in sales could partly reflect a growing involvement from first-home buyers who are no longer required to take out mortgage insurance.
“Demand for housing remains strong, supported by strong population growth and low unemployment,” he said. “These structural drivers continue to underpin activity, even as borrowing costs rise.
“However, the capacity to respond to this demand remains constrained. The rise in the cost of skilled labour and materials is expected to persist through 2026, while access to shovel-ready land remains the key limit the number of homes that can be delivered.
“Input costs are also emerging as a renewed risk. More significant is the risk that higher energy costs feed into the production of materials such as steel, bricks and concrete, which would place further upward pressure on construction costs later in 2026.”
According to the HIA New Home Sales report, based on a monthly survey of the largest volume home builders in the five biggest states, Queensland recorded the strongest monthly increase in March, rising 34.3%.
South Australia followed with a 22.5% increase, then Victoria at 19.1% and New South Wales at 11.8%. Western Australia was the only state to post a fall, down 0.3% in new home sales contracts.
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