New home sales have fallen to their lowest level in more than a decade, reflecting a sharp deterioration in new home building conditions, the Housing Industry Association (HIA) says.

A survey of Australia’s major residential builders shows the total number of new homes sold in July fell eight per cent to 6,428 across the country, its lowest level since January 2000.

That followed an 8.7 per cent decline in June.

Sales of detached houses fell nine per cent in July, while sales of multi-units rose one per cent, according to the HIA JELD-WEN new home sales report.

The worst performing state was Western Australia, where new detached house sales fell 12.7 per cent to a 10-year low.

“The July sales result reinforces the marked deterioration in new home building conditions that is so glaring in mid-2011,” HIA chief economist Dr Harley Dale said.

Dr Dale said one positive was that the weak environment was good news for home buyers, making it a good time to build or buy a new dwelling.

“A competitive building market, less pressure on skilled trades, and steady interest rates combine to mean that if you’re in a financially sound position to do so, now is a particularly good time to build new home,” Dr Dale said.

The report found detached new house sales fell 11.2 per cent in NSW, 7.8 per cent in Victoria, 8.5 per cent in Queensland, 1.5 per cent in South Australia in July.