Home sales in the country saw an uptick in April, as shown in the new Homes Sales Report issued on Tuesday by the Housing Industry Association (HIA), but the surge could prove insufficient to ward off creeping threats of recession in the sector.

From the 9.4 per cent decline recorded in March, the industry posted a recovery by chalking up new home sales of 6.9 per cent in the following month, the latest HIA survey said, which collected data from Australia's top 100 builders.

But the April gains, according to HIA chief economist Harley Dale, failed to recoup the crippling retreat of the prior month, prompting him to conclude that "national new home building is heading to a recessionary level in 2012."

Mr Dale's declaration was based on his observation that a rapid and sustained recovery will not visit the sector this year as highlighted in the dismal figures that reflected the "aggregate volume of both new home sales and local government building approvals," within the covered period.

Despite the home sales upswing in April, the HIA report noted that turnarounds in the past 12 months plunged by more than 24 per cent, pointing to the prevailing sentiment since the start of the current year that the series of rate cuts rolled out by the Reserve Bank since November 2011 failed to hit the intended mark.

If sales did shoot up in April, it was because first home buyers in Victoria took advantage of the incentives extended to them by the state government before the breaks had expired, The Wall Street Journal said on its report.

The rush in the state was the solid reason that Australia's home sales jumped in the month and not because the borrowing cost was pulled down twice by the Reserve Bank of Australia (RBA) in November and December last year and then froze the level though the end of April.

The whole picture, according to Dr Dale, points to a gloomy scenario for the housing industry, which analysts said was one of Australia's banner sectors in the immediate aftermath of the global financial crisis in 2008.

With the sector now struggling, economists fear that confidence in the Australian domestic settings could be shaken especially in these times that the commodities market, where the country draws most of its economic revenues, has been gradually correcting its price levels.

The adjustments have so far chipped away considerable fraction of projected earnings that mining companies have reported on their previous financial reports, the slump coinciding with the property sector's softening.

As key global economies adopted cautious approach due to unsettling indicators prevailing in Europe, local banks tightened their credit policies that resulted to lower demands for home and the subsequent falls on home construction activities.

Mr Dale said that the RBA may have to follow through on the 50-basis-point cash rate cut it unlashed earlier this month but acknowledged too that interventions coming from the central bank may not kick up at all the sector's falling numbers.

"Rate cuts are not a panacea, and the key to a housing recovery lies with governments at all levels," the HIA analyst was reported by ABC as saying on Tuesday.

"Job losses are mounting and governments need to collectively act to revitalise new home building through reducing the sector's excessive tax burden and through an immediate injection of investment and funding," he added.

CommSec chief economist Craig James agreed with HIA's assessment that the RBA "can only do so much in stimulating activity."

"Ultimately, federal and state governments need to sit down with developers, industry bodies and finance providers to work out the fundamental constraints on new home building," Mr James said in a note that CommSec has released in conjunction with the new HIA report.

The sector, he warned, carries with it "multiplier effects across the economy ... and if fundamental solutions aren't found to boost home building, then a raft of sectors will be left without momentum."