New home sales in Australia rose for the fourth month in a row, with a 1.6% improvement in May, taking monthly sales to their highest level in 1½ years.
The Housing Industry Association said on Wednesday there was solid evidence of modest growth in new residential construction and that was expected to continue into the new financial year.
"That outcome was important, following as it did a sustained period of weakness which saw activity in a majority of markets reach, historically, very low levels," chief economist Harley Dale said.
"The key is whether a new home building recovery can be sustained, and at a growth rate sufficient to meaningfully assist the Australian economy with its rebalancing acts."
Dr Dale said federal government help in increasing the supply of new housing was needed to help the Australian economy make the transition.