New housing starts are up for the March quarter, but have still fallen below last year's figures.

ABS data has shown a 3.1% seasonally adjusted increase for new home starts in the March quarter. While detached housing starts fell 1.9%, medium and high density residential dwelling construction was up 14.6% for the quarter.

However, housing industry bodies say the numbers still betray softness in the home building sector. Urban Taskforce CEO Aaron Gadiel said the result was down 11.5% compared to the March 2010 quarter, while HIA chief economist Harley Dale said detached housing starts are now running 9% below their long-term average.

"An overall downward trend persists and has now extended into a second year, and that should be of considerable concern to policy makers in an environment of stalled progress on housing supply reforms and heightened uncertainty over future interest rate moves," Dale said.

The HIA has again claimed that leading indicators point to a further softening of new home construction in the months ahead.