The housing slump accelerated in September. Matching the poor performance of resales, sales of newly constructed houses tumbled last month, too. According to the Census Bureau, there were 41k (unadjusted) single-family units sold. That’s down an alarming 18% from the same month last year. At a seasonally adjusted annual rate of 553k in September, the construction market is down, for now, six months and counting.

With demand softening, inventory begins to pile up and builders who had been counting on the “strong” economy everyone keeps talking about are forced to discount prices. The Census Bureau estimates that the median sales price for new homes sold in September was $320k (unadjusted), 3.5% lower year-over-year. Though this estimate may be revised in the months ahead as more comprehensive surveys come back, for now, it is by far the largest monthly price decline since the bust.

With the median price lower in three out of the past five months, the 6-month average rate of change is now negative for the first time in almost seven years.

If new homes aren’t selling and builders are being forced to reduce prices to get inventory to move, you can bet that they aren’t going to be enthusiastic about building more single-family structures. Sure enough, the Census Bureau reported last week that the real estate slump has worked its way into construction. The number of permits filed to build single-family homes was a seasonally-adjusted annual rate of 851k in September.

While that was up from a revised estimate of 827k in August, the trend is clearly downward dating back to February. Something has changed in the housing market this year.

It’s the Fed, they say. The central bank in its considered approach to this very strong economy is pushing up short-term interest rates so as to make sure what’s really good doesn’t become even better. The buzzword thrown about this entire year is “overheating”, which is ironic given the last time the same term was used in the same context it worked out pretty much the same way – no overheating, not even a minimally functioning economy.