Mixed news on the housing front yesterday with Reserve Bank figures showing lending for May was solid, but new home sales fell sharply.

The Housing Industry Association said the volume of new home sales dropped 6.4% in May, down more than 12 percentage points from its April increase of 6.2%, as interest rate rises and a falling in consumer confidence seems to have cut demand for houses.

It was the weakest monthly result since July 2008.

"There is no sustained upward momentum in new home sales in 2010 because higher interest rates and concerns over the threat of further rate hikes are dampening demand," said HIA chief economist, Dr Harley Dale.

Home loans approvals have fallen more than 20% since midway through last year and the RBA has lifted rates six times since last October, the final one being in May.

The bank's board meets next Tuesday and won't touch rates while it continues to watch the impact of the offshore instability which shows no sign of going away.

Home auction clearance rates are falling (under 60% in Sydney and Melbourne auctions in the past couple of weekends).

And house prices growth was weak in May, but fell outside the major capital cities, according to the RP-Data Rismark group yesterday.

The RP data-Rismark Hedonic Home Value Index rose a seasonally adjusted 0.5% in May, up from April's rise of 0.2%.

Outside the major capital cities, prices fell a seasonally adjusted 0.2%.

In the year to May, house prices in capital cities grew by 12.1%.

"This second consecutive month of single-digit annualised gains sends a signal that the double-digit growth rates recorded since January 2009 are behind us," RP Data's director of research, Tim Lawless, said in a statement on Wednesday.

Home values rose 2.4% in Sydney, while Melbourne saw growth of 3.3%, Canberra 3.7%, Adelaide 2.3% and Brisbane 0.8%.

Home prices fell 2.1% in Perth and 1% in Hobart.

The HIA said new detached home sales rose by 13.6% in NSW in May but dropped 8.5% in Victoria, more than 12% in Queensland and over 10% in WA.

Building approvals are out later today for May and will probably show little or no growth, although the volatile other dwellings category could spike, again.

Housing finance rose in May and was up by more than 8% in the 12 months to May, according to the Reserve Bank's private credit figures yesterday.

Total credit provided to the private sector by financial intermediaries rose 0.5% in May, following a 0.3% rise in April.

The rise was bigger than the 0.3% forecast by the market.

In the year to May, total credit rose by 2.7%, the fastest growth since last August.

Housing credit rose 0.7% for the month and increased 8.6% from a year ago, seasonally adjusted.

Owner-occupied lending rose an unchanged 0.6%, to be up 9.4% for the year (9.6% annual rate in April), while investor lending continued to grow, up 0.7% for an annual rate of 6.6% (6.1% in the year to April).

Other personal credit fell 0.5% in May, but was up 3.1% over the year (3.2% for the year to April).

Business credit was up 0.4%, in May but fell 5.6% in the 12 months. But that was better than the 6.8% annual fall for the 12 months to April.

That was the biggest monthly rise since January 2009, and indicates that there's a slow recovery in lending to business.

The annual rate has fallen from minus 8.3% in November last year to the May rate.