Decade-low home sales should move RBA

by Adam Smith01 May 2012

The housing industry believes the lowest new home sales in a decade should spur the RBA into action today.

The HIA- JELD-WEN New Home Sales report has showed a decline of 9.4% for new home sales in March. HIA chief economist Harley Dale said the weak sales should jolt the RBA into making deep cuts when it meets this afternoon.

"The Bank needs to send a clear signal that it is back on the case of assisting an economy that is clearly weaker than it anticipated in 2012," Dale said.

Dale called on the Reserve to lower the official cash rate by 50bps at today's meeting. He said that rate cuts, while not a "panacea", could nonetheless give a boost to a sector he claimed was heading in the wrong direction.

"Leading housing indictators such as new home sales are pointing to on-going deterioration in already very weak new home building conditions. That situation is in turn having a major negative impact on manufacturing and services sectors," Dale said.