New WA home sales surge in January

Detached new home sales in WA surged 12.2 per cent in January in a sign that upgrading owner occupiers and investors may be coming back in to the market, a leading industry body says.

Nationally, new homes sales rose 9.5 per cent to 8,444 in January, the Housing Industry Association said today.

Sales rebounded from December's 11 month low and were the highest since August 2009.

HIA chief economist Harley Dale said early signs of increased new housing activity needed to be backed up by further evidence.

"If we were to get a sustained improvement in new home sales over the first half of 2010 then that would suggest a second round new housing recovery is achievable, driven by private demand from upgrade buyers and investors," Dr Dale said in a statement.

"The January new home sales result is a promising start in this regard."

Dr Dale added that there were significant headwinds, including the end of the increased first home buyers grant, rising interest rates and a shortage of skilled labour and land supply.

Detached home sales rose 10.1 per cent and multi unit sales gained 4.1 per cent, the second consecutive increase.

New home sales gained in all states.

Victoria led the rebound, with a 17.1 per cent surge reversing four consecutive months of declines, followed by WA with 12.2 per cent.

Sales rose 3.1 per cent in NSW, gained 6.3 per cent in Queensland while South Australia increased by 6.6 per cent.