The latest ABS building activity data as of June 2026 shows a residential construction pipeline that is growing faster than it is being completed. Approvals and commencements have both strengthened since early this year, while completions of detached houses have declined. The outlook for the next 12 months remains challenging as economic conditions soften, and interest rates remain high.
Approvals for houses have climbed steadily, from about 27,500 in June 2024 to around 31,500 in June 2026. Commencements have followed, rising from about 26,500 to more than 30,500 over the same period. Both lines increased from the start of 2026, suggesting builders are converting approvals into starts. The pattern is similar for total dwellings. Approvals have risen from about 41,500 to around 53,000, and commencements from about 41,500 to just over 50,000.
Capacity is the constraint
The weak point is completions. House completions have trended down, from around 29,000 in June 2024 to about 27,000 in June 2026, even as commencements have increased. This suggests that the construction pipeline is moving more slowly, with labour availability, construction capacity, and materials limiting how quickly houses can progress to completion.
As a result, the stock of unfinished houses is continuing to build. The number of houses under construction increased from a low of around 84,000 in June 2025 to approximately 94,000 in June 2026, the highest level in the last two years. In other words, more houses are entering construction than are being completed, increasing the backlog of work still to be delivered.
Figure 1: House Construction
Sources: ABS, FWPA analysis
Total dwelling completions are holding up
Multi-unit dwellings look different. Subtracting houses from total dwellings, multi-unit completions have not fallen. Total dwelling completions bottomed at around 42,000 in mid-2025 and have recovered to about 45,000, while house completions kept sliding. Multi-unit completions are therefore rising, and this shows up in total dwellings under construction, which reached about 243,000 in June 2026, up from a low of around 209,000 in December 2024. Multi-unit projects have longer build times, so the pipeline will take time to clear. Some of the growth in the pipeline reflects work that is still in progress.
Figure 1: Total Dwelling Construction
Sources: ABS, FWPA analysis
Higher rates and uncertainty in the next 12 months
The outlook is more challenging due to monetary policy. The RBA has raised rates four times this year, most recently this month to 4.6%. Higher borrowing costs reduce serviceability for owner-occupiers and investors, and raise financing costs for developers and builders. Approvals are the first part of the pipeline to react, followed by commencements.
There is a risk that approvals and commencements weaken in 2027, reducing demand for structural timber just as supply chains adjust to the recent increase in activity. Timber suppliers should continue to monitor approvals and commencements as leading indicators of future demand, and completions as an indicator of construction capacity.
A growing pipeline of homes under construction should not be interpreted as a sign of strong market conditions. If completions continue to lag behind commencements, the pipeline may simply reflect capacity constraints rather than underlying strength. Higher interest rates will further test the resilience of both demand and the construction pipeline.
