Australian new home sales plunge to a decade-low in July

New home sales in Australia plunged to a decade-low during the month of July, also declining for the third time in almost four months that pointed to a continuing downtrend in the country’s housing sector in the near term.

Australia’s monthly survey of large-volume builders said new home sales fell a seasonally adjusted 9.7 percent in July, more than offsetting an 8.2 percent spike in June, data released by the Housing Industry Association (HIA) showed Monday.

In addition, detached housing sales fell heavily in all mainland states, led by a 12.6 percent slide in South Australia. From largest percentage decline to smallest, sales fell by 8.7 percent in Queensland, 8.2 percent in Western Australia, 6.2 percent in New South Wales and by 6 percent in Victoria.

"The short term outlook for healthy levels of new home construction remains intact – calendar year 2016 will be a record year for new dwelling commencements, but the situation could look very different from next year. In all likelihood we will experience sharper falls in new home construction in both 2017 and 2018," said Harley Dale, Chief Economist, HIA.

However, the sharp plunge is not entirely surprising, given the construction output data from the Australian Bureau of Statistics that showed a more-than-expected decline in the indicator during the second quarter, marking a fourth consecutive drop.

Meanwhile, the Reserve Bank of Australia had slashed its benchmark lending rate to a new record low in early August to 1.5 percent, the second cut this year, in the face of sluggish inflation.