Sales remain elevated despite a November decline

In a recent report by the Housing Industry Association (HIA), the volume of new home sales in Australia experienced a notable decline in November 2025, dropping by 16.0 per cent. Despite this dip, sales figures remain robust compared to the start of the year, highlighting a recovery in the new home building sector. This trend is detailed in the HIA New Home Sales report, a monthly survey that serves as a leading indicator of future detached home construction across the country’s five largest states.

HIA Chief Economist Tim Reardon elaborated on the current market conditions, stating, “The volume of new homes sold in Australia fell by 16.0 per cent in November 2025 but remains significantly stronger than at the start of the year. The broader trend confirms that a recovery in new home building is gaining momentum.” This decline in November follows a period of strong sales in September and October, which Reardon described as typical volatility seen during the early stages of a market recovery.

The report reveals that sales in the three months leading up to November 2025 were 9.4 per cent higher than the previous quarter and 23.7 per cent higher than the same quarter the previous year. These figures represent the most robust quarterly results since mid-2022. “This monthly decline in November follows a period of very strong sales in September and October. It is normal to see volatility at the early stages of a recovery,” Reardon noted.

The economic environment is increasingly supportive of new home building in 2026, bolstered by three cuts to the cash rate in 2025. These cuts have improved borrowing capacity and restored confidence among potential buyers. “The three cuts to the cash rate delivered in 2025 have improved borrowing capacity and restored confidence among buyers who had been waiting on the sidelines,” Reardon explained.

Several factors are contributing to the rising confidence in the market, including strong population growth, low unemployment, and rising established home prices. These elements are encouraging more households to consider entering the new home market. “This rise in confidence is being reinforced by strong population growth, low unemployment and rising established home prices. These factors are encouraging more households to return to the new home market,” Reardon added.

However, the challenge lies not in demand, but in meeting it with sufficient new home supply. “Demand is not the challenge in this cycle. The challenge is delivering enough new homes to meet it,” Reardon stated. The geographic spread of demand is broadening, with notable improvements now observed in the Sydney basin. The higher volumes this quarter were supported by double-digit percentage increases in New South Wales and Victoria compared to the same quarter a year earlier. “These two markets were the slowest to respond to interest rate cuts, but both are now showing clear signs of sustained improvement,” Reardon commented.

Looking forward, Reardon believes that New South Wales and Victoria will play a critical role in driving the recovery in 2026, as home building increasingly contributes to national economic growth. “They will play a much larger role in driving the recovery in 2026 as home building increasingly drives economic growth nationally,” he said. With one in ten employed Australians working in the building industry, the increase in activity is expected to help maintain low unemployment levels. However, Reardon warns of potential risks: “This is a risk for the industry as ongoing low levels of unemployment risk delaying the next cut to the cash rate.”

In contrast, Queensland, Western Australia, and South Australia continue to report strong underlying conditions, driven by faster population growth and more competitive land markets. Yet, land price inflation poses a significant challenge, as it is now the single biggest factor affecting the cost of new home construction. “In many regions, it is not interest rates that are holding back new supply, but the cost and timing of delivering serviced land. Planning delays and infrastructure bottlenecks continue to slow the release of new lots,” Reardon explained.

To address these issues, Reardon calls for government intervention to reduce the cost of bringing land to market and to avoid imposing additional taxes and charges. “If governments can reduce the cost of bringing land to market and avoid adding further taxes and charges, this recovery will strengthen and become more sustainable,” he urged.

The decline in new home sales in November was led by a 19.7 per cent decrease in Victoria, followed closely by New South Wales with a 19.6 per cent drop. Queensland, South Australia, and Western Australia also saw declines of 13.0 per cent, 12.4 per cent, and 11.1 per cent, respectively.