Residential dwelling approvals have recorded their first back-to-back monthly increases since the beginning of 2015, according to analysis released by the Australian Bureau of Statistics.

According to the ABS, residential approvals climbed 3.9% to 19,652 during October, following on from the 2.2% increase recorded during September.

The October figure is also the highest monthly total since approvals peaked in July.

While total approvals rose over October, they were not distributed evenly across dwelling types, with multi-unit approvals increasing 10.1%, while detached housing approvals went backwards by 2.1%.

Across the states, South Australia saw the biggest increase of approvals over October, with a 23.4% increase, followed by New South Wales where approvals rose 22%.

Tasmania was home to the biggest decrease in approvals over the month with a 41.6% fall, while approvals declined 28.7% in Queensland.

While the national October approval figures are a good sign for the construction industry, policy makers have been warned not to underestimate the impact a slowdown in the sector could have on the wider economy.

“Latest HIA projections indicate that new home building is likely to have peaked in 2014/15, and has started to decline from these record levels. In this context, it is vital that more favourable policy settings are implemented to allow for an orderly adjustment in activity,” HIA senior economist Shane Garrett said.

“The strength of new home building has been the big economic story of 2015 in Australia,” commented. Residential building is making a crucial contribution to economic growth, at a time when other areas of investment are quite weak,” Garrett said.

“The performance of new home building is commendable given that the taxation burden on the sector is so high. The challenge of consistently delivering a pipeline of affordable new housing stock is made much more difficult by taxation and other supply hurdles.”