Washington area home builders sharply scaled back their construction plans during the first nine months of this year, with the number of building permits issued by local governments down 21 percent from the same period in 1989, according to a new report.

The biggest cutback was in single-family construction plans, with permits off by 25 percent from January through September compared with the same period last year, economist Robert Sheehan said in the report. Apartment unit permits were down 12 percent.

Construction permits are an early indication of builders' plans and their expectations for the housing market.

"A recession psychology is engulfing builders, buyers and renters" here, said Sheehan, vice president of McLean-based Regis J. Sheehan & Associates. Most troublesome to building industry officials, he said, are expectations of more cuts in defense spending, continued construction financing problems for builders and fear of "a general economic recession."

Sheehan's report, based on Commerce Department statistics, showed that permits dropped dramatically in September compared with the same month last year. This past September, a total of 1,020 single-family home permits were issued, a decline of 48 percent from the September 1989 figure, and multifamily permits totaled 263, an 86 percent drop from September a year ago.

U.S. Housing Markets, a publication of Lomas Mortgage USA, said that "demand for residential land has collapsed this year" in the Washington area and that "few developers are eager to commit to new projects in the face of the market's steep home-buying nose dive."

John B. Heller, incoming president of the Northern Virginia Building Industry Association, said speculators have driven up the cost of land in recent years, sometimes "flipping" -- buying and selling -- property two or three times before a builder purchases it for a housing development.

The drop in building permits did not surprise Heller. "The general economy is down throughout Northern Virginia, as well as in the rest of the country," he said. But "we're in a cyclical business ... and the upside is around the corner. A year from now, it will be better."

For now, Heller and several other builders said they are building few houses on speculation, and are waiting until they have buyers before beginning construction.

Recent federal regulations restricting the number of loans financial institutions can make to one borrower, as well as concern stemming from the savings and loan losses and the housing sales slump, have all contributed to builders' decisions to request fewer building permits, several analysts said.

The statistics reported by Sheehan showed the construction decline in the region has pervaded the Washington suburbs. Until recently, home sales and construction were stronger in some areas, such as parts of Prince George's County, where home prices are generally lower. For most of this year, Prince George's was one of the few areas where new construction topped last year's levels but now the county's market is also beginning to soften, Sheehan said.

"There's no really solid market at all in the metropolitan area now," he said.

Permits issued in the first nine months of 1990 were down by 6.2 percent for the five suburban Maryland counties as a whole. The decline was 4.1 percent in Prince George's, with builders getting 3,768 permits this year, down from 3,931 last year.

Montgomery County permits dropped by only 0.3 percent over the same period. But in Gaithersburg, site of a construction boom in recent years, the drop was 35 percent.

In the Northern Virginia suburbs, permits dropped by 35.7 percent during the first nine months, compared with last year. Fairfax County builders cut their building plans almost in half this year, getting 46.4 percent fewer permits during the nine-month period. Decreases of 52 percent in Prince William County and 28.3 percent in Arlington were reported.

The decline was sharpest in Alexandria, at 91.6 percent, but involved a relatively small number of permits -- 534 issued in 1989 compared with 45 this year.

The District of Columbia issued 331 building permits during the first nine months of this year, a 30.3 percent increase over the 254 total during the same period last year.

Susan Matlick, executive vice president of the Suburban Maryland Building Industry Association, said builders in the Maryland suburbs have cut back construction plans and "are going to be extremely cautious about starting" new homes. Most will wait until they have contracts from prospective buyers before beginning to build, she said.

Matlick said she expected a reduction in permits in September but the size of the decline "was a shock." October and November normally are busy months for home builders, who like to begin construction before the ground freezes so they can have houses for sale early in the new year.

The slowdown in construction this winter will mean a shortage of new homes for sale next spring, she said.

At the moment, she said, "the average consumer's concerns are being artificially fueled by continually hearing and reading that the economy is in a tailspin. There are still good buys {and} a lot of bargains" available.

The Virginia division of Pulte Home Corp. has sold more homes this year than last year and had its best sales week of the year last week, according to Tom Eckert, the division president.

"We've done better than the market" because the company's average selling price is "significantly less" than the average in this area, he said. While the cost of Pulte houses ranges from $80,000 to $800,000, prices of most of its houses are toward the lower end.

Eckert said he foresees prices stabilizing at current levels, interest rates falling somewhat and, with most builders cutting back on construction, fewer houses for sale within the next year.

The National Association of Realtors reported this week that the median home price of existing homes in the Washington area rose 3.4 percent in the third quarter of this year compared with the same period last year, although executives with two large real estate companies said they have not seen any price increases yet.