The construction industry says it expects the next year to be tough, as permits for new dwellings remain weak and people are wary of borrowing.
Statistics New Zealand says the number of consents for new dwellings fell a seasonally adjusted 2% in October, continuing the downward trend since March.
Once volatile apartment numbers are stripped out, consents fell 1.1%, to a 15-month low.
Registered Master Builders Federation chief executive Warwick Quinn says the small gains the residential building sector made earlier in the year are now a thing of the past, and it is clearly in recession again.
The wider housing market is oversupplied and sluggish, while costs affecting housing and the construction industry have gone up, he says.
Mr Quinn expects the sector will remain flat until the recovery is well entrenched, and investors and home buyers feel more confident.
There will be some boost from rebuilding work following the earthquake in Canterbury, and from the Government's weathertight funding package which will kick in next year, but Mr Quinn says that doesn't reflect the general state of the sector.
He says the next 18 months is going to be tough for non-residential construction, until service sectors like the retail and manufacturing start to expand.