The trend for new housing consents jumped 15.5 per cent in April, to reach the highest level in two years, says Statistics New Zealand.
The numbers, which exclude the volatile apartment sector, follow an 8.6 per cent fall during March, and an earlier smaller rise of 10.5 per cent in February.
However the trend is still 29 per cent lower than the peak of June 2007.
When the apartment sector is included, the number of new housing units authorised rose 8.5 per cent, following a 0.1 per cent rise in March.
The actual figures show a total of 1400 dwellings were approved in April, of which 91 were apartments.
All building consents were worth $807 million in April, an 8.8 per cent decrease on a year ago.
Residential building consents were worth $480 million in April, 35 per cent higher than one year ago, while the value of non-residential building consents was 38 per cent down on April 2009, a series record which was boosted by the Christchurch International Airport development.
Consents for social, cultural and religious buildings were up $38 million, hospitals and nursing homes were up $36 million, while consents for offices and administration buildings were down $238 million on last year's figures which took into account the airport development.
Canterbury recorded the biggest increase in the number of dwellings approved during April (up 127 units to 266), of any other New Zealand region, while Northland posted the biggest decrease (down 51 units to 66).
ASB economist Jane Turner said overall building demand appeared to be picking up, albeit gradually.
"With the budget details now revealed, it is possible that the recovery in consent issuance could gather more momentum from June."
The prospect of higher GST after October may even prompt some to bring forward construction plans, she said.
"Today's data confirms residential construction is set to gradually recover over the year.
"However, as the fundamentals for housing demand are set to weaken over the second half of 2010, we expect that this recovery is likely to remain fairly subdued," she said.
Goldman Sachs JBWere economist Philip Borkin said the rise signalled an ongoing recovery in residential construction, despite uncertainty around tax changes ahead of last week's budget.
It would be interesting to see how the housing market fared now that this was known, he said.
"We will probably have to wait until the June or July numbers to get a better gauge of this."
ANZ economist Mark Smith said while the news for the sector was encouraging, there was still a long way to go, with the value of consents more than 10 per cent below post-2005 averages.
The strong increase in the value of issuance for hospitals suggested the construction sector remained reliant on support from government spending.
