The number of building consents for houses issued in March fell 8.3%.
It was the biggest monthly percentage drop in consents issued for new houses since October 2008.
Statistics New Zealand says 1292 consents were issued in March, once seasonal variations are taken into account.
However, consents for apartments rebounded during the month to 75. Only 13 were issued in the preceding month.
Westpac markets economist Michael Gordon says it's unclear what caused the latest drop.
He says current levels of building are not strong enough to keep up with population growth and he expects consents to steadily improve.
Meanwhile, economists at ASB say the modest level of consents raises a question mark over the strength of the recovery.
The value of residential consents, including alterations and additions, fell slightly to $488 million in March.