The latest HIA - JELD-WEN New Home Sales Report found, the number of new homes sold in July 2011 dropped by eight per cent following a decline of 8.7 per cent in June.

Detached house sales fell by nine per cent in the month of July 2011 while sales of multi-units increased by one per cent.

“The July sales result reinforces the marked deterioration in new home building conditions that is so glaring in mid-2011,” HIA chief economist Harley Dale said.

“The weak environment is actually good news for new home buyers. A competitive building market, less pressure on skilled trades, and steady interest rates combine to mean that if you're in a financially sound position to do so, now is a particularly good time to build a new home.”

CommSec economist Savanth Sebastian said investors could be enticed into the property market by strong population growth and low rental vacancy rates.

“While homes sales are weak it is not all bad news as there are good reasons for home building to increase over the medium term,” Mr Sebastian said.

“The rental market is still tight and population growth is healthy. And with the labour market remaining strong, investor housing demand is likely to pick up pace towards the end of 2011 and early into 2012 – provided the Reserve Bank remains on the interest rate sidelines .”