HIA data shows a 3.7% drop in July as borrowing costs and policy uncertainty dampen buyer confidence
New home sales declined for the third consecutive month in July, dropping 3.7% as rising interest rates and policy ambiguity continued to suppress consumer confidence, according to the Housing Industry Association (HIA).
Sales in the three months to July were 13.5% below the previous quarter, though they remained 17.1% higher over the 12-month period compared to the prior year, supported by earlier momentum.
National house prices also fell 2% in the three months to July — the steepest quarterly decline since 2022.
The HIA New Home Sales report identified the tederal Budget as a contributing factor, with its impact on established home prices cited as likely weighing on new home sales.
"The recent decline in sales reflects households becoming more cautious in response to higher borrowing costs and increased uncertainty, rather than a reduction in Australia's underlying need for new homes," said HIA senior economist Tom Devitt (pictured right).
"Households continue to face the cumulative impact of three interest rate increases this year. At the same time, uncertainty surrounding recent housing policy changes has encouraged many prospective purchasers to delay, or cancel, major financial decisions."
Devitt maintained that structural demand drivers remain intact, pointing to low unemployment, elevated migration, ongoing household formation, and a persistent national housing shortage.
He noted that because the new and established home markets are interconnected, weakness in established property prices flows through to new home sales and broader construction activity.
"The goal of building 1.2 million homes will become increasingly unachievable if governments continue to restrict who can build, invest in, or finance new homes," Devitt said. "Policies that add uncertainty, reduce investor participation, or constrain finance will only make it harder to deliver the homes Australians need."
Private New House Sales – Australia (seasonally adjusted)
Source: HIA Economics
New South Wales was the only state to record a monthly increase in new home sales in July, rising 2.1%. Queensland posted the sharpest decline at -10.9%, followed by South Australia (-7.6%), Victoria (-2.0%), and Western Australia, which was relatively stable at -0.4%.
On an annual basis to July 2026, Victoria led all states with a 27.6% increase compared to the prior year, ahead of South Australia (+26.3%), New South Wales (+16.6%), Queensland (+10.0%), and Western Australia (+3.3%).
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
