New home sales surged by 8.3% in January, marking the best result since June 2008, according to a new report.

The Housing Industry Association (HIA) survey found that new home sales rose by 24.2% in South Australia, 19.3% in Victoria, 10.9% in Queensland, and 0.9% in Western Australia. NSW bucked the trend with sales dropping by 5.8% in the same month.

Detached homes surged by 9.8% in the month and rose 3% for the three months ending January.

"The best home affordability conditions in five years and the boost to the First Home Owner Grant propelled the sale of new detached homes," said Harley Dale, HIA chief economist.

However, Dale noted that the pre-contract sales of apartments and home units fell for the fourth month in a row, indicating a continued softness in rental investor activity.

"A better start to 2009 for new home sales is an encouraging result. But a sustained recovery in new construction will rely on trade-up buyers and investors returning to the market, and the timely procurement of the planned 20,000 new public and community housing dwellings," he said.

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