Home building approvals have fallen to an eight-year low in June, as the housing sector struggles to recover from the coronavirus pandemic.
Approvals for the construction of new homes were down 4.9 per cent, which was worse than the two per cent decrease the market was expecting, but better than the 15.8 per cent fall the previous month.
Approvals for private sector houses were down 5.7 per cent in the month, while those in the other dwellings category, which includes apartment blocks and townhouses, fell 5.3 per cent.
National Australia Bank economist Tapas Strickland says the outlook for dwelling construction has suffered a sharp downturn since the COVID-19 pandemic started.
"Along with the pandemic's impact on unemployment and income, rental vacancy rates have risen and rents are declining," he said.
Mr Strickland said the closing of Australia's international borders has halted migration and slowed population growth, which has also affected demand for housing.
"Some offset will be the government's HomeBuilder scheme that tends to favour detached house construction with anecdotes of strong lot sale enquiries."
Westpac senior economist Matthew Hassan said the pull back is in line with Westpac's expectations and has approvals tracking in line with its forecasts for 2020.
"Approvals will likely understate weakness in building as work on many existing projects will likely be delayed and some approved projects will be shelved or slower to commence, he said.
In the 12 months to June, building approvals were down 15.8 per cent, the Australian Bureau of Statistics said on Thursday.
Falls in dwelling approvals were recorded across all the states for both detached and attached dwellings, with NSW, Queensland and Western Australia suffering double digit falls.