ABS figures show that the number of dwellings approved rose 7.4 per cent in March 2012, following an 8.8 per cent fall in February.
New South Wales led the charge, recording a massive 49.3 per cent increase in approvals, reclaiming some of the ground lost last month.
Western Australia came in second with an 11.1 per cent increase.
But Queensland dragged the national average down by recording a drop of 8.7 per cent.
Housing Institute of Australia (HIA) economist Geordan Murray said the results show the market is correcting itself after February.
“Clearly February was a bad result, but the main driver for the bounce-back was the ‘other dwellings’ sector in NSW.
“In February that section was the main detractor, so we’ve seen that recover this month and cause the rebound ,” Mr Murray told Real Estate Business.