A lift in NSW transport projects helped overall building activity pick up in April.
The Performance of Construction Index rose by 5.6 points to 50.8 in April, pushing above the 50-point level separating expansion from contraction.
This follows building activity slipping to a 13-month low in March.
The April jump was lead by the strong growth in engineering construction, following 21-months of contraction.
"The lift in engineering construction activity was generally attributed to an improving flow of infrastructure work, particularly transport projects in NSW," the report said.
Ai Group head of policy Peter Burn said the renewed pipeline of transport infrastructure projects offset falls in activity and new orders in the residential and commercial building subsectors.
"While this pipeline is not likely to completely offset the further fall in mining-related work, the outlook for residential and commercial construction lifted somewhat this week with the Reserve Bank's reduction in the cash rate (on Tuesday," he added.
The report said house building activity shrank for a third consecutive month, while in the apartment subsector also recorded a slight contraction.
"House builders mainly commented on slower market conditions due to fewer customer enquiries, weaker home buyer sentiment and lower new orders," the Ai Group report said.
The over-supply of apartments and tighter lending criteria were cited as the reasons for the softening in apartment building conditions.
Housing Industry Association economist Diwa Hopkins also said Tuesday's interest rate cut would support healthy levels of new home building over the near to medium term.
"Nevertheless, the level of building is still likely to be shy of what occurred in 2015," Ms Hopkins added.
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