Building approvals suffered a sharp drop in January with marked falls reported for private sector houses and the more volatile "other dwellings" category.
The Australian Bureau of Statistics said building approvals slumped 27.9 per cent in January, compared to a month earlier, to 12,916 properties.
Private sector housing approvals fell 17.5 per cent to 8712, while other dwellings tumbled 43.6 per cent to 4007.
However, Australia's international trade position showed a strong improvement in the month due to an eight per cent jump in exports reported for January, driven by metal ores and minerals shipments.
Imports fell two per cent.
The monthly trade surplus grew to $12.9 billion in January, up from $8.8 billion in December. This was just shy of the record $13.3 billion surplus in July last year.
Australia's construction industry also registered some improvement in February after the disruptions caused by the COVID-19 Omicron variant outbreak over December and January.
The Australian Industry Group/Housing Industry Association performance of construction index rose 7.5 points to 53.4 in February, indicating the sector is again growing with a score above 50 points.
Ai Group chief policy advisor Peter Burn said there was a healthy pick-up in new orders across the construction sector, and while difficulties in supply chains persisted in the month, the pace of decline in supplier deliveries eased.
Ongoing inflationary pressures were also evident with cost rises for inputs and wages growth remaining elevated.
"These conditions, together with the rebound of new orders, suggest further inflationary pressures in the period ahead," Dr Burn said.
Treasurer Josh Frydenberg said the outbreak of the Omicron variant has not derailed the economy, which expanded rapidly in the final three months of 2021.
He said issues around workforce absenteeism due to the latest impact of the coronavirus were abating, and in the first two months of this year consumer spending is four per cent higher than a year earlier.
"We've seen business conditions improve, business confidence come back and jobs ads are still more than 30 per cent higher than at the start of the pandemic," he told ABC radio on Thursday.
"Omicron has not derailed our economy."
Wednesday's national accounts showed the economy surged by a strong 3.4 per cent in the December quarter, matching the rebound after the 2020 recession, which was a 46-year high.
This followed the 1.9 per cent contraction in the September quarter caused by the Delta COVID-19 variant lockdowns.
However, shadow treasurer Jim Chalmers believes the government is again being too complacent about the recovery
"We've had now five or six times where the treasurer has said the economy's roaring again and that it's all fine," he told ABC radio.
"It's why we need a genuine plan to get the economy growing and not just more of these billions of dollars of political patch-ups and rorts and waste and mismanagement that we currently see in the budget."
Mr Frydenberg will hand down the budget on March 29 ahead of a federal election in May.
