Construction activity finished the year weak as home building wound down in December.
The Ai Group and Housing Industry Association Performance of Construction Index (PCI) rose 0.4 points to 47 points in December, from 46.6 points in November.
However, a level below 50 points indicates activity in the sector is winding down.
Ai Group head of policy Peter Burn said the construction sector closed out 2016 with a third straight month of contracting conditions.
"Activity, new orders and employment were all down on the previous month and activity in each of the four sub-sectors shrank in December," he said in a statement.
"The lower level of new orders suggests we cannot expect a sustained turnaround over the first few months of 2017."
HIA senior economist Shane Garrett said both house and apartment building activity contracted again during the month, however, the pace of decline slowed in the apartment sub-sector.
"During 2017, we expect new dwelling starts to decline although the carry over from homes commenced last year means that activity on the ground will remain elevated for much of the year ahead," Mr Garrett said.
AAP