New home sales grew in January after a small drop in sales the previous month, Housing Industry Association data shows.

The number of new home sales increased by 0.5 per cent in January, after a small fall in December, data from the Housing Industry Association (HIA) shows.

January’s new home sales were also up 17 per cent up on the same month in 2013, and in the three months to January sales were up 22.3 per cent compared with the same quarter twelve months earlier.

HIA senior economist Shane Garrett said new home sale numbers have been encouraged by low interest rates and confidence in the housing market.

“The return of house price growth to most cities has done much to oil the market and allow transactions to start occurring in greater numbers,” he said.

In January, sales of new detached houses rose by 0.3 per cent, with multi-unit sales increasing by 1.6 per cent.

On a state by state basis, new private detached house sales increased by 10.9 per cent in Victoria and 0.4 per cent in Queensland.

However, there were declines in South Australia (6.9 per cent), New South Wales (6.4 per cent) and in Western Australia (1.9 per cent).