Amidst headlines pointing to a potential recovery in the housing market, building approvals and home sales remained underwhelming, recent industry figures show.

The number of dwellings approved in August fell by 3.9% in trend terms. The decline was driven by unit approvals, which decreased by 9.2%. House approvals also fell, albeit at a milder rate of 1%.

In seasonally-adjusted terms, attached dwellings held relatively flat for the month whilst houses contracted a further 3%.

Also read: Why The Property Downturn May Not Be That Bad

South Australia recorded a 29.7% decline in building approvals, the biggest drag to the overall construction activity. Queensland and the Australian Capital Territory followed, reporting respective decreases of 21.4% and 27.7%.

On the other hand, New South Wales and Victoria led the gains in August, witnessing building approval growths of 10.6% and 6.5%, respectively.

BIS Oxford Economics' Maree Kilroy said approvals are expected to keep trending down for the rest of the year.

"Soft signs of increased credit availability stabilising the existing property market have emerged. Not until upgraders and downsizers see sustained house price growth, will momentum build in the existing property market, enough to flow through to increased demand for new dwellings," he said.

Housing Industry Association senior economist Geordan Murray said the new home market has yet to see a pick-up in activity despite improved conditions in the established home market.

"The tail end of the housing downturn continues to unfold," he said.

HIA's New Home Sales Report showed that sales rebounded by 7.3% in August, which partially offset the weak showing in July. However, despite the improvement, new home sales in the winter months were 4.6% below the level recorded a year ago.

"Throughout the remainder of 2019 the new home market should start to reflect the lower interest rate environment following the RBA's cuts to the official cash rate. The modest lift in home prices over recent months has led to improved confidence and is likely to result in increased activity amongst investors," he said.