New home sales fall for a fourth straight month: what it means if you're planning to build

The Housing Industry Association's New Home Sales report, released this month, shows sales of new homes fell for a fourth consecutive month in August 2026, dropping to their lowest level in more than a year. The HIA is warning that the new-home market "cannot absorb" further interest rate rises stacked on top of this year's federal budget tax changes, a message with real implications if you are weighing up a house-and-land package or an off-the-plan purchase.

What the data shows

HIA's survey of Australia's largest volume home builders found new home sales fell nationally by 10.0% in August, and were 19.3% lower over the three months to August than the previous quarter. Sales are also running below where they were at the same time last year. The decline was broad-based across the mainland states, led by Victoria, followed by Queensland, New South Wales, South Australia and Western Australia.

HIA economists point to a combination of factors squeezing the new-build pipeline: rising construction costs, softer buyer sentiment, and higher financing costs are landing at the same time as this year's federal budget changes to negative gearing and capital gains tax on established homes. Falling prices for established homes in several capital cities are also making newly-built properties look comparatively less attractive on price alone, even though new builds keep more favourable tax treatment under the reform.

Why this matters if you are considering a new build

• Builder finances are under more strain. A slower sales pipeline adds to pressure already building across the construction sector this year, where a number of builders have entered administration. It is worth checking a builder's financial position and payment schedule closely before signing a fixed-price contract.
• Fewer buyers can mean more room to negotiate. Softer demand has, in some cases, given buyers more scope to negotiate on inclusions, upgrades or timing with volume builders competing for a smaller pool of sales.
• Interest rate risk cuts both ways. Build contracts can run for many months between signing and settlement, so it is worth understanding what a further rate rise would do to your repayments before you are locked into a fixed build price and a variable loan.

What this means for first home buyers

Slower new home sales are a market-wide indicator, not a signal that every project or builder is at risk, and building or buying off-the-plan can still make sense depending on your budget, timeline and the specific developer involved. A reasonable first step is simply to stress-test your own numbers before committing.

• Check how a further interest rate increase would affect your repayments and borrowing capacity before signing a building contract, since HIA and several major banks still see further RBA rate rises as a live possibility in the months ahead.
• Compare the full cost of a new build, including site costs, upgrades and likely delays, against buying an established home in the same area.
• Ask your builder or developer about their financial position, insurance arrangements and how progress payments are structured, particularly on larger house-and-land or off-the-plan projects.

Run the numbers

These tools can help you work through the trade-offs between a new build and an established home before you commit:

• Interest Rate Shock Tester - see what a further RBA rate rise could do to repayments on a loan you are planning to take out for a new build
• Borrowing Power Calculator - check how much you may be able to borrow under current lending conditions before signing a building contract
• True Cost Calculator - look beyond the headline build price to the full cost of getting into your first home