Fall brought a chill to homebuilding as Housing Starts, which measure the start of construction on homes, fell 4.2% from September to October. Starts for single-family homes, which are the most important because they are in such high demand among buyers, declined 6.1% from September and 20.8% from October of last year. Building Permits for single-family homes, which are indicative of future supply, also fell 3.6% for the month and 22.1% year over year.

What’s the bottom line? Builders have clearly slowed down production and it appears they have learned their lesson from 2006 and 2007, when they kept building homes despite waning demand. This means the supply and demand dynamics that we are seeing today are the exact opposite of what we saw in 2007 when there was a crash. While we are certainly seeing an activity recession in housing, low inventory should continue to be supportive of home prices.