The Housing Industry Association says new home sales posted a fourth straight monthly rise in January.
The association's widely watched index, which surveys Australia's largest volume builders, rose 4.2 per cent last month.
Both new houses (4 per cent) and units (4.9 per cent) drove the increase, which the HIA's chief economist Harley Dales says shows some decent momentum building across the residential construction sector.
"It is a promising update to see the momentum of late 2012 carrying into the new year," he noted in the report.
"Over the three months to January this year new home sales increased by 10 per cent, although sales volumes were still 6.4 per cent lower compared to the same period a year earlier."
Harley Dale says, with the volume of detached house sales not much more than half the long term average, there is still a long way to go for the industry to just get back to normal.
"While we've got a recovery that's now gone for four months, it follows an overall decline that ran for several years to very low levels," he said.
"So great to see four consecutive increases, but from a low base there's clearly a lot of work still to be done before we can be classing new home building as a healthy sector in the Australian economy."
The Reserve Bank is counting on an interest rate induced bounce in residential construction to offset an imminent decline in mining investment.