Sales of new homes surged by 9.5% in January 2010 underpinned by strong interest from second homebuyers and investors, a survey of Australia's largest residential builders.

According to HIA's New Home Sales report, sales of privately-owned detached houses climbed by 10.1% in January 2010 - the first decent result since August last year. Multi-unit sales recorded a second consecutive increase in January, rising by 4.1% following a 14.5% jump in December 2009.

"The January result was an encouraging early sign that upgrade owner occupiers and investors may be coming into the new home building market in sufficient numbers to offset the withdrawal of stimulus to first time buyers," said Harley Dale, HIA chief economist.

"If we were to get a sustained improvement in new home sales over the first half of 2010, then that would suggest a second round new housing recovery is achievable, driven by private demand from upgrade buyers and investors. The January new home sales result is a promising start in this regard. However, it is vital to see evidence of a second round recovery emerge in coming months in what remains a very challenging period for residential construction."

Detached new home sales rose by 3.1% in NSW, Victoria surged by 17.1%, WA jumped by 12.2%, Queensland up by 6.3% and a 6.6% increase in South Australia.