Oct. 31 (Bloomberg) -- Australian sales of newly built homes declined in September at a faster pace even after the central bank cut borrowing costs for the first time since 2001.

Sales of homes fell 1.8 percent from August when they declined 1.3 percent, the sixth drop in nine months, the Housing Industry Association said in a report e-mailed to Bloomberg News today. Detached house sales declined 2.3 percent, the eighth straight month of falls, and sales of apartments gained 1.2 percent.

The Reserve Bank of Australia's quarter-point reduction in the benchmark interest rate in early September ``did little to turn around weak sentiment and the negative impact of higher rates over 2007 and 2008,'' said Harley Dale, chief economist at the Canberra-based association, which represents building companies.

``The clear signal from leading housing indicators is that new home building activity will be weakening into 2009,'' he said. ``However, we would expect to see a modest recovery in housing starts emerge over the first half of 2009.''

Central bank governor Glenn Stevens and his board also cut the benchmark rate by 1 percentage point to 6 percent this month, the biggest reduction since 1992, and will probably reduce it by half a point next week, according to a Bloomberg news survey of economists.

``There is cause for optimism that the worst may be behind us,'' Dale said.

To contact the reporter for this story: Jacob Greber in Melbourne at jgreber@bloomberg.net

Last Updated: October 30, 2008 20:01 EDT