Builders, anticipating a decline in business as time runs out for the housing tax credit, pulled back on permits in September, according to data released Tuesday by the U.S. Census Bureau.

In September, total building permits slipped 1.2% on a monthly basis to a seasonally adjusted level of 573,000.  Single-family permits also moved downward by 3% to a 450,000-unit pace.

Overall starts also stumbled, falling slightly to a seasonally adjusted level of 590,000 in September. That is 0.5% below the previous month. However, single-family housing starts increased 3.9% on a monthly basis to a level of 501,000.

“Two forces were tugging at the single-family construction market in September,” explained IHS Global Insight U.S. Economist Patrick Newport, referring both to the federal tax credit for first-time buyers and dropping inventories of new homes. “The credit shifted housing starts and permits from 2010 and late 2009 into the first seven months of 2009. A few homes started in August 2009 may be completed and sold in time to qualify for the credit. But builders starting homes in September will be out of luck.”

But dropping numbers of unsold new homes—just 262,000 in August—mean that builders must somehow replenish their inventories without overbuilding. Assuming they strike the right balance, that could be good news for the industry. “Low inventories will require that builders ramp up production, which means that the job losses in the residential construction sector will soon turn into job gains,” Newport predicted.

On an annual basis, the comparisons for permits and starts no longer look so dire. Year-over-year, total housing permits in September stood 28.9% below the same month last year; single-family permits were 14.9% below September 2008.

Similarly, total housing starts dropped 28.2% in September compared to last year; single-family starts dipped 8.7% on an annual basis.

Of course, builders going forward in coming months will be going against fairly low levels of building activity; September 2008 marked the beginning of the economic crisis that forced the federal takeover of Fannie Mae and Freddie Mac as well as the bailout of the country’s banking system.

Alison Rice is senior editor, online, at BUILDER magazine.