The number of new home sales rose to a five-year high in March, with record low interest rates helping to fuel the housing boom.

New homes sales rose 4.4 per cent in March, seasonally adjusted, the Housing Industry Association says.

Sales of flats, townhouses and semi-detached houses were up 11.3 per cent, easily outstripping house sales which rose 2.6 per cent.

The result come the day after the Reserve Bank cut the cash rate for the second time this year, reducing it to a new record low of two per cent.

“Lower lending rates will provide added support to residential construction activity, which is emerging as a key area of growth mitigating the effects of the downturn in mining investment and construction,” HIA economist Diwa Hopkins said.