SYDNEY--Confidence is steadily returning to the Australian home-building sector as sales of new homes stabilize and building approvals rise, according to a representative body of leading construction firms.
The Housing Industry Association said new home sales in the month of September were unchanged compared to August, which leaves sales 8.6% higher over the past twelve months.
Increases in sales in South Australia, Western Australia and Victoria offset the monthly decline in sales in New South Wales and Queensland in September, HIA said in a report.
The data is consistent with a recent recovery in consumer confidence, with some measures putting that at its highest level in more than two years, said HIA economist Maurice Tapang.
The improved outlook comes as economists are projecting interest-rate cuts to begin early next year, with some adding that the Reserve Bank of Australia might be in a position to start cutting rates before the end of this year if inflation remains in retreat.
"Consumers tend to bide their time when it comes to big-ticket purchases, such as buying a new home, especially in a downward cycle," Tapang added.
"Strong population growth, low unemployment, real wages growth and the prospect of no further increases to interest rates will drive new home-building activity out of its downward cycle," he said.
Write to James Glynn at [email protected]; @JamesGlynnWSJ