NEW YORK (CNN/Money) - What goes up, must come down. All good things come to an end. Nothing lasts forever. The supply of clichés is endless and right now all of them fit the U.S. housing market: It had to happen sooner or later, the bubble had to start deflating or eventually it could have popped.

Today's housing starts numbers, showing declines in three out of four regions and a hefty drop in building permits, just the latest piece of evidence suggesting the bubblicious housing market -- what Mr. Greenspan has delicately referred to as a "frothy" (i.e., lots of little bubbles that foam up together) -- is losing some of its hot air.

Almost every economist is quick to point out that even though today's housing starts numbers declined they still remain solidly above the two million annual rate mark, and the market is anything but "weak." But with the Federal Reserve still clearly on a path toward higher interest rates and with mortgage rates at higher levels than a few months back, most conclude the softening trend will continue.

What does this mean for the economy? One thing is softer spending on home stuff like new stainless steel refrigerators and cool modern furniture and building materials like fancy granite (can you tell I love home stuff?). As home prices climb more slowly, plateau, or even pull back in some areas it will make it harder for people to use their homes as piggybanks, something so many of us have benefited from the past few years.

The view at the Federal Reserve seems to be that housing is not the swing factor for the U.S. economy and a deflating bubble would only shave its growth rate, not a big deal if the other cylinders like business investment and manufacturing more broadly keep firing. We shall see.

If the Fed is right, and even if it's a little bit wrong, this deflating bubble has to be a good thing. Homes have been growing rapidly less affordable for many families across the country. People have been tempted to speculate in housing as they were tempted to speculate in tech stocks ... and we all know how that episode of bubblemania ended – very badly for most investors.

For the majority of homeowners who have been in their homes for awhile and did not buy at the tippy top of their regional market, they may not sell their homes for as astronomical and ridiculous a price as they were salivating over before the bubble eased off, but many are probably still sitting on a boatload of equity.

For homebuyers, this may be a godsend. Instead of feeling desperate to buy no matter what, and worried sick they will completely miss the boat, now they have a chance to sit back, see what home prices do, and wait until the Fed is done cutting rates. Then the bond market will be ready to rally again and mortgage rates perhaps ease off a bit.

The bond market had a visceral reaction to yesterday's report from the National Association of Homebuilders showing that its monthly index of homebuying demand took quite a tumble in November. Unlike the Fed, bond traders seem to think that a softer housing market could take a toll on growth.

What bond traders should not expect is that the Fed will immediately alter its rate-hiking plans simply because housing is cooling off a bit. The Fed may be relieved to see the housing bubble deflate gently. In fact there has been much speculation that the real reason for its long, steady series of rate hikes in the face of relatively tame inflation numbers is its desire to get long-term bond yields up and in turn push up mortgage rates to make sure the bubble would not over-inflate and explode in the Fed's face.

So Fed officials could declare a small victory on the housing bubble front. But they could also keep raising interest rates because of their strongly-held view of an economy that is growing at or above its trend rate is in danger of generating higher inflation.

What's tricky for the Fed, and the long-term rate-setting bond market, and for all the rest of us, is to make sure that it doesn't hike rates so much that it causes the bubble to really burst with a loud bang that startles the economy into a slowdown.

After all for most Americans their home is their biggest asset, their largest chunk of wealth, a major part of their retirement planning. If the Fed gets this right, it will get the credit for helping to engineer a subtle shift from overdrive to cruise control in housing and helping to preserve the value of this crucial asset.

If the Fed gets it wrong, it will be tough for the current crew to explain to suddenly less wealthy Americans just why it was so important to keep raising rates even as they heard, as everyone did, the sound of the air slowly hissing out of the housing balloon.

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Kathleen Hays is economics correspondent for CNN. Read more of her columns here.