The number of building approvals fell for a seventh straight month in January but economists say there are signs the struggling housing sector may have turned the corner.

That glimmer of hope came from Australian Bureau of Statistics figures which showed the number of private sector housing approvals rose 1.1 per cent in January.

It was the first improvement in that category since April 2008, which RBC Capital Markets senior economist Su-Lin Ong said was a tentative sign the large interest rate cuts since September last year were starting to flow through.

“While the housing sector remains weak, there are some tentative signs of policy traction as multi-decade lows in mortgage rates lend support,” Ms Ong said.

“The details were less dire.”

However, the data indicated property investors remained firmly on the sidelines.

The number of approvals in the “other dwellings” category, which includes flats, townhouses and other multi-unit homes, declined for the sixth month in a row after backpedalling 15.4 per cent in January.

ICAP senior economist Adam Carr said the caution shown by property developers reflected difficulties securing credit.

“It was really only through January that developers were seeing an easing in credit tightening,” Mr Carr said.

“Now it makes sense to me that developers wouldn’t then run out and get an approval. There is too much uncertainty.”

In terms of the overall picture, total dwelling approvals fell by 3.7 per cent in January, seasonally adjusted, extending a slide that began in July and has continued unabated for seven months.

The result was well below the market forecast of a 1.6 per cent rebound.

Building approvals have sunk 33.5 per cent in the 12 months to January.

CommSec chief economist Craig James said it would be a couple more months before the big interest rate cuts and the boost to the first home owner grant came through in the data.

“At some point in time we are going to see an almighty rise because we just can’t continue to under build here in Australia,” Mr James said.

Housing Industry Association chief economist Harley Dale said it would take more than the revival in the first home buyer market to generate a recovery in residential construction.

“A further decline in building approvals in January is a very weak update on the short-term prospects for new home building activity,” Mr Dale said in a statement.

The worst performing state was New South Wales, where building approvals fell a massive 19.1 per cent in January. Approvals were also down in Queensland and Western Australia.

Building approvals rose in South Australia, Victoria and Tasmania.

AAP