Experts say a local authority shake-up is needed to address a housing shortage after new figures showed just 870 homes were started in the second quarter.
Government housebuilding figures revealed a 30 per cent decrease in the three months to June, compared to the 1,250 starts in the West Midlands in the first quarter.
It mirrored a fall across England as the figure dropped at its steepest rate for three years.
Andy Argyle, partner at KPMG in Birmingham, pointed to talks over a new West Midlands-wide combined authority as a potential antidote.
However, that would require an agreement over a region-wide planning strategy which is thought to be a contentious point.
Mr Argyle said: "Nationally, it's predicted at the end of the year we will have built 140,000 homes which falls significantly short of the 250,000 homes a year we need to keep up with demand and the West Midlands seems to be in line to be hit by a higher than average shortfall.
"The Government needs to think more innovatively. The cap on local authority borrowing could be raised, green-belt swaps could be introduced to free up low-value green belt land and of course the momentum behind the West Midlands Combined Authority brings a real opportunity to do things differently.
"The Government is increasingly showing that it recognises the housing crisis is real - now we need some lateral thinking to fix it."
Mr Argyle said recent government announcements around releasing brownfield land and relaxing planning laws should help boost supply as they come on line but much more needs to be done.
Across England, there was a 14 per cent decline in housing starts to 33,280 in the period from April to June which was the sharpest since January to March 2012.
Starts were six per cent lower year-on-year.
It meant the pace of new housebuilding was 32 per cent below its peak level in 2007, though 94 per cent above a trough at the height of the financial crisis in 2009.
The sharp decline in the number of new housing starts in the latest quarter puts the brakes on after a 29 per cent quarter-on-quarter rise at the start of 2015 - which was the biggest increase on records going back to 2006.
For the year to June 2015, starts totalled 136,320, down one per cent on the year before, according to the figures from the Department for Communities and Local Government.
Campbell Robb, chief executive of housing charity Shelter, said this was only half the level of the 250,000 needed to deal with the country's housing shortage.
He added: "Once again, these figures show that we're not building anywhere near the number of homes needed each year, leaving millions of ordinary hard-working people priced out.
"And worryingly, despite claims by the Government that progress is being made to solve our chronic housing shortage, the number of new homes started has actually decreased."
Housing minister Brandon Lewis said: "Our One Nation Government has got the country building again with these figures showing that 131,060 extra homes have been built in the past year.
"This has provided a real boost to the UK's construction industry and is delivering the homes that hard-working people rightly deserve."