The latest data indicates just over $17.2bn of residential construction was done in the third quarter, down 1% on the previous quarter.
According to the Australian Bureau of Statistics (ABS), the value of construction work done overall was a touch over $51 billion, down 2% in seasonally-adjusted terms.
The only state or territory to record an uptick in construction over the quarter was the Northern Territory, up in value by 3.9%.
New private sector houses built were up in value 1%, from $8.56 billion to $8.65 billion over the quarter in seasonally-adjusted terms.
Renovations and additions - including conversions - in the private sector were also up 4.56% in value over the quarter, from $2.25 billion to $2.35 billion.
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Westpac senior economist Andrew Hanlan said this was weaker than market expectations.
"The point estimate of -2.6% was weaker than the market (median -2%), albeit not as soft as Westpac (-3.8%)," he said.
"The key surprise, housing declined by less than anticipated ... renovations, often volatile, rebounded."
However, Mr Hanlan said the "key take-out" out of construction data was that "the Australian economy rebounded solidly as COVID restrictions were eased."
"The construction data is one of the quarterly partials ahead of Q3 GDP [gross domestic product], to be released on December 2," he said.
Second quarter GDP figures confirmed Australia was in a recession, down 7% - the highest quarterly fall on record (data goes back to 1959).
Two consecutive quarters of GDP growth, on the other hand, implies Australia is out of a 'technical' recession.
How does HomeBuilder factor in?
Housing Industry Association economist Angela Lillicrap said construction work done was at its lowest level since 2014, but did point to a couple of green shoots in the sector.
“This data precedes the positive impact of the HomeBuilder program due to the lag between purchasing a house and commencing construction. It does reflect the impact of the restrictions on activity including the Victorian shutdown period,” she said.
“With the outlook for a strong new home building market and a strong renovations market, employment within the sector will grow into the new year."
A boost in private renovations and home builds have not necessarily led to keeping tradies in jobs, with insolvencies in the past fortnight up in the construction sector by 6.25%, according to the Australian Financial Security Authority.