The fall coincides with reports from major house builders several months ago that buyer demand was easing to more normal levels.
According to the latest Government figures for England 33,000 homes were built between July and September, 3,500 fewer that the previous three months.
The fall against the previous three months was felt across both private (-8%) and public (-22%) housing sectors.
Official figures reveal that house building peaked for two consecutive quarters at around 36,000 before the sharp fall in the latest quarter.
Starts are now running a third below their March quarter 2007 peak.
Overall annual housing starts totalled 138,640 in the 12 months to September 2014, up by 16% compared with the year but worrying low for the build market to have peaked.
The picture for completions was brighter with the September quarter recording 31,130, up 5% on the previous quarter and 8% up on a year ago.
