More than half of residential construction firms expect sales to remain sluggish or even deteriorate, even as inquiries at display homes start to increase after a big drop last year, according to a survey of major builders.

Only 41 per cent of companies polled by Macquarie believed sales would increase, although that was a marked increase from just 11 per cent surveyed last year. The cautious outlook comes despite half of builders noting sales had actually increased over the past three months – a turnaround from 86 per cent of builders posting flat or declining sales last year.