Residential construction fell 10% in the year ended March, a figure Bank of New Zealand economist Mark Walton described yesterday as "seriously weak".
"Hot on the heels of the Re-serve Bank's dramatically lower growth forecasts, published in last week's monetary policy statement, building consents confirmed the extent of the slowdown already under way in the residential construction sector."
Real residential building activity fell 6.6% in the March quarter, following a 2% drop in December, according to Statistics New Zealand figures.
Mr Walton said non-residential activity was not performing as poorly, although at first glance, the first quarter's fall of 5.9% looked just as bad.
However, compared with the December fall of 11.6%, March was an improvement.
"The Easter effect is likely at play here, with fewer trading days during the first quarter likely enhancing the extent of the declines. Underneath it all, it's clear that the construction sector - or the residential component of it at least - is in serious trouble.
"What's more, figures confirmed that the slowdown in the housing market is no longer confined to its second-hand component."
Falling house prices and slumping turnover were no longer the be-all and end-all of the housing horror story, he said.
The rapid slowdown in the broader housing market had hit construction activity and GDP (gross domestic product) growth was the consequent casualty.
Quotable Value figures out yesterday painted a similarly gloomy picture, Mr Walton said.
Annual price growth in the three months to May fell 2.4%, the ninth consecutive decline.
While the numbers confirmed the house price movements of more timely monthly indicators - such as the Real Estate Institute's fig-ures - it was the anecdote from QV staff that was of most interest.
"The message accompanying the release noted that valuers reported they expect de-clines in house price growth to continue for some time yet. Stern warnings indeed from more-or-less independent folk well placed to have an educated opinion about such matters."
However, it was worth noting that it was such a slowdown in the broader housing sector that the Reserve Bank hoped to see unfold, Mr Walton said.
Yesterday's data was likely to be welcomed by the central bank.
It was the overheated housing market that was the source of much of the economy's inflationary excess in recent years.
Friday's retail trade figures would be scrutinised, he said.
"We suspect the underlying story, like that of the building statistics, will remain one of woe."
