New Home Starts Fall 11% as Housing Accord Target Slips

ABS data shows dwelling commencements fell 11.2% in the March quarter, leaving Australia well short of its 1.2 million National Housing Accord target.

Australia's housing construction sector has taken a sharp step backwards, with new data from the Australian Bureau of Statistics showing total dwelling commencements fell 11.2 per cent in the March 2026 quarter. The result has arrived at exactly the wrong moment, with industry bodies warning the nation is falling further behind on the federal government's National Housing Accord target of 1.2 million new homes.

The Adviser reports on the March 2026 quarter Building Activity data, which shows total commencements in seasonally adjusted terms slipped from the December 2025 quarter to just 48,012 starts — a sizeable fall that cuts across all segments of the residential construction market.

New private sector house commencements eased 3.5 per cent over the quarter to 27,658 dwellings. New private sector other residential starts — primarily townhouses and apartments — fell a steeper 20.7 per cent to 19,116, even as medium and high-density activity remained up 5.6 per cent compared to the March 2025 quarter. At the end of the March 2026 quarter, 243,864 dwellings were under construction nationally, including 90,972 new houses.

Completions were similarly soft. New private sector house completions fell 0.6 per cent over the quarter to 26,201 and were down 6.1 per cent on a year earlier. New private sector other residential completions edged up just 0.7 per cent to 16,365, leaving total private sector completions down 0.6 per cent at 43,816.

How Far Behind the Housing Accord Target Is Australia?

The Housing Industry Association has placed the ABS figures directly against what the National Housing Accord actually requires — and the comparison is stark.

HIA senior economist Tom Devitt said: "Australia needed to deliver an annual rate of 240,000 new homes to reach the 1.2 million new homes target, but in the 12 months to March, just 197,340 new homes commenced construction."

That is a shortfall of more than 42,000 homes per year against the Accord trajectory. And HIA's own modelling puts the real need even higher. "HIA estimates 250,000 home builds each year are required on a sustained basis to meet these demands and start addressing the pre-existing shortage of housing across the country," Devitt added.

Devitt noted that performance varied significantly by state. Western Australia, Queensland, South Australia and the Northern Territory have been leading national improvement in home building volumes and carry a significant pipeline of new sales ready to commence. By contrast, the south-eastern state recoveries have been delayed and are more vulnerable to further disruption — though strong population growth and tight labour market fundamentals should support activity in those markets over time.

Cost Pressures and Budget Uncertainty Are Adding to the Drag

The construction shortfall is not purely a story about interest rates. Master Builders Australia chief economist Shane Garrett described the March quarter as "a challenging period where external shocks and tighter policy settings significantly impacted the construction industry," pointing to escalating building costs and shortages of skilled tradies as key drags on activity.

"Construction demand across housing, non-residential building and civil have all been squeezed by higher interest rates," Garrett said.

Master Builders Australia CEO Denita Wawn said the ABS data arrived just as builders were reporting softer conditions following the May federal budget. "Building activity remains below the level needed and, at the same time, builders are telling us that uncertainty created by the Federal Budget is affecting confidence and slowing investment decisions," she said.

Wawn also flagged that uncertainty was feeding directly into project pipelines: "This uncertainty means some builders will think twice before proceeding with new projects. In some cases, projects may be delayed, scaled back or not proceed at all."

What This Means for Home Buyers and Investors

For borrowers, persistent underbuilding has a direct bearing on the supply side of the market. Fewer new homes means sustained pressure on existing stock, which tends to support prices in well-located areas even through short-term rate-driven corrections.

For property investors weighing up whether to buy new or established, this construction data provides important context. When supply is consistently running 40,000-plus homes per year below what the market requires, the structural case for holding well-located property does not disappear because near-term sentiment softens.

For first home buyers, the picture is more nuanced. The current period of softer auction clearance rates and some price correction in Sydney and Melbourne has reduced competition compared to a year ago. But the underlying shortage of housing means that any softness is unlikely to persist indefinitely — which matters for buyers who are waiting for a deeper correction before committing.

If you're trying to work out what you can borrow in the current environment, a borrowing power calculator is a useful starting point before you begin speaking with lenders or inspecting properties.

The full breakdown is available at The Adviser.