NSW Premier Gladys Berejiklian says "there isn't much left" of Balmoral in Sydney's south-west, with the devastating Green Wattle Creek bushfire destroying most of the town.
Berejiklian said residents were still unable to return to see if anything could be salvaged because of the continued fire danger.
"We have received bad news. There isn't much left [in Balmoral]," Berejiklian said.
"Even if people have lost their properties, they still want to go back to see what's left and if there is anything they can salvage.
"We know that's part of the recovery. We want people to have access to their land, to their property, as soon as they can, but it has to be safe."
Two bushfires in the Blue Mountains have joined together and the NSW Rural Fire Service (RFS) is not ruling out the blazes connecting with the huge Gospers Mountain "mega fire".
Commissioner Shane Fitzsimmons said this morning the fires at Green Wattle Creek and Ruined Castle had joined together.
The two massive blazes now all but encircle Sydney to the west, only separated by a narrow 12km strip north of Katoomba.
Together with the adjoining Three Mile fire they have burned through nearly 1 million hectares alone.
"The Gospers fire is likely to be brought closer and connected with the northern side of the Great Western Highway and the communities of the Blue Mountains region as we work to protect those communities," Fitzsimmons said.
"We need to be reminded that the Creek fire and the Ruined Castle fire, they have already joined up. There is potential for connectedness, but we are not expecting them to join."
The fire at Grose Valley was again upgraded to emergency level this morning but was moved down to watch and act this afternoon.
Fire crews are looking to make headway in bringing several blazes under control as temperatures ease across New South Wales on Sunday.
Temperatures are only expected to reach the mid-20s, a drop of as much as 20C from Saturday in some parts of the state, where catastrophic fire conditions wreaked havoc and saw several properties lost as southerly winds caused unpredictable fire conditions.
Commissioner Fitzsimmons this morning warned people to remain vigilant despite the easing of conditions.
"In the Greater Sydney region, we didn't see the weather conditions reach catastrophic, thank goodness," he said.
"While the conditions have eased today, it is a good reminder that people need to remain vigilant and stay across what is going on."
He said he was hopeful fire crews would be able to wrest back some control amid the cooler temperatures and added firefighters had a battle plan ready that included backburning where possible.
He said depending on conditions, the strategy for management of fires in the cooler conditions could change.
Meanwhile, Prime Minister Scott Morrison arrived at RFS headquarters in Sydney to meet with fire commissioners and emergency service personnel for a briefing on the fire situation in NSW.
Morrison conceded he caused "great anxiety in Australia" by taking a family holiday in Hawaii as bushfires burned across the country, saying with the benefit of hindsight he would have made a different decision.
"I get it that people would have been upset to know that I was holidaying with my family while their families were under great stress," Morrison said.
"I am not a trained firefighter nor am I an expert like those in the next room doing an amazing job, but I am comforted by the fact that Australians would like me to be here simply so I can be here alongside them as they go through this terrible time.
"And so to those Australians who … caused upset to … I apologise for that."
Morrison acknowledged firefighters were "fatigued" and people were scared.
"No-one wants to be out there fighting these fires, no-one wants these fires to be happening at this time. They're getting tired and they're getting fatigued," Morrison said.
"I know people are anxious and I know people in some places are rightly fearful of what is literally at their door."
While light rain is forecast in Sydney around Christmas Day, it is feared it will not make an impact and extremely hot conditions will return at the end of the week.
It will likely be a month before significant rain arrives in NSW.
Fires still burning out of control
The RFS has found a man reported missing from the Dragan area, east of Lithgow.
Authorities had been searching for the man after he was encouraged to leave amid deteriorating conditions in the Grose Valley fire.
The Gospers Mountain "mega fire", which burned through 470,000 hectares, was downgraded to watch and act level at 1:15am, while nearby fires at Kerry Ridge and Upper Turon Road at Palmers Oaky were also downgraded.
The Currowan fire on the South Coast was also downgraded to watch and act status.
Saturday saw temperatures north of 40C and dozens of buildings were destroyed during a disastrous day for the state.
The RFS said 20 buildings, including homes and businesses, had been affected along the Bells Line of Road, stretching from Lithgow to Bilpin.
The home of the Clarence/Dargan's RFS captain was lost.
His wife Susan Alexander said there was nothing her husband could do to save their home.
"He drove down our driveway and it's all gone. His sheds are melted. It's all gone and we can't get back in to see. It's a bit morbid but I want to go see my home," she said.
She also criticised the Scott Morrison's leadership.
"I find it appalling what our prime minister has done, his lack of leadership. There's no empathy. Somebody who makes Kevin Rudd and Tony Abbott look good."
Four firefighters were also injured, with one hit by a car and treated by paramedics, who said he was not seriously injured.