Housing muscling up to fill mining vacuum New data has revealed that house prices have continued to climb with record low interest rates. THE housing sector is looking increasingly like the industry that is going to replace the vacuum left by a fading mining investment boom. New data shows house prices have continued to climb with record low interest rates, while new homes sales have grown for four consecutive months. In contrast, another report showed manufacturing stumbling in July, to record its 25th month in contraction. "The housing sector is the sector most likely to take the baton from mining and drive the economy forward over the coming year," Commonwealth Securities chief economist Craig James said in a note to clients. The federal government and the central bank are concerned the transition from the mining sector to non-resource economic activity is unlikely to be seamless. Reserve Bank of Australia governor Glenn Stevens said this week that a stronger trend in non-resources business investment looks like it is a while off yet. He indicated the central bank will need to cut the cash rate again, a reduction financial markets are heavily predicting to occur at next Tuesday's monthly board meeting. Mr James believes if the housing recovery broadens, this could very well be the last reduction. The RP Data-Rismark Hedonic Australian Home Value index of capital city home prices rose by 1.6 per cent in July, to be 4.9 per cent higher than a year earlier. At the same time, the Housing Industry Association (HIA) said new home sales rose 3.4 per cent in June. Additionally, the Genworth homebuyer confidence index soared from a record low of 93.4 points in March to 100.1 at the end of July, the highest level since it was first calculated in 2007. However, conditions in manufacturing are far less rosy. The Australian Industry Group's performance of manufacturing index fell 7.6 points in July to 42.0, remaining firmly below the 50-mark that separates contraction from expansion. "While the fall in the Australian dollar and the May interest rate cut have been extremely welcome, they have not yet been enough to turn around a very challenging business environment," the group's chief executive Innes Willox said. Meanwhile, there was a mild positive for the federal government as Treasurer Chris Bowen puts together an economic statement with the nation's terms of trade stabilising in the June quarter after a general rapid decline over the past two years. Official data showed both export and import prices eased 0.3 per cent in the June quarter. "This is a mild near term positive for nominal GDP growth," National Australia Bank senior economist David de Garis said. Nominal GDP provides a gauge to company profits, and in turn government tax revenue.