The recent grants announced by the federal and state governments are expected to buoy home sales after the three-month losing streak, according to the Housing Industry Association (HIA).

Tim Reardon, chief economist at the HIA, said the announcement of these support schemes, particularly of the HomeBuilder program, will help reverse the fall in new home sales and improve market confidence.

"This will improve the outlook for employment in the sector in the second half of 2020 and into 2021," he said.

The latest data from the HIA show a 4.3% decline in new home sales in May. Over the three months to May, sales were down by 20.3% compared to the preceding three-month period.

"New home sales have fallen in each of the three months since the introduction of COVID-19 restrictions. This will flow through to a reduction in the volume of work on the ground in the second half of this year," Reardon said.

New home sales fell to their lowest level on record in March, before falling further in April and May. In addition, the number of project cancellations has risen to 26%, which is higher than the 17% average recorded after the global financial crisis.

Cath Hart, executive director at the HIA, said the recent housing grants will also boost lending, which is already showing signs of weakness.

"The housing finance data vindicates the timing behind Prime Minister Scott Morrison and WA Premier Mark McGowan's introduction of their respective stimulus programs, the HomeBuilding Scheme and the Building Bonus Grant, to support the residential building sector," Hart said. "The data highlight why it is so important that both of these job-protection schemes have targeted homebuyers from across the spectrum."