Seasonally adjusted figures from the Australian Bureau of Statistics show building approvals fell by 3.5 per cent in March 2014.
This marks the second consecutive monthly decline for the housing construction sector.
Detached housing approvals fell by a minimal 0.7 per cent, but units saw a significant seven per cent decrease.
Nonetheless, the construction sector remains more active than one year previously.
Total dwelling approvals for March 2014 are 20 per cent above March 2013.
Housing Industry Association senior economist Harley Dale said the sector remained robust despite slowing activity.
“Building approvals for the month of March 2014 are consistent with healthy growth in new home building activity this year, although the approvals cycle itself may well have peaked,” he said.
Mr Dale called the housing construction industry a “highlight” of the Australian economy.
“New home building has a large reach into the wider domestic economy and the sector is very much Australia’s economic barometer in 2014,” he said.
“Leading indicators such as building approvals are clearly a positive for the economic outlook. How many of these approvals are converted into dwelling commencements and over what timeframe will exert a considerable influence over wider domestic economic activity.”