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In a medium saucepan over medium-high heat, combine the sliced apples and water. Cook for 6 minutes, stirring occasionally. Add the butter.
Meanwhile, whisk together the sugar, cinnamon, cornstarch, and nutmeg in a medium bowl.
After the butter has melted, add the sugar mixture to the saucepan (over the apples). Stir constantly for 2 minutes, or until the sauce thickens.
Remove from heat and let the sauce sit for 5 minutes.
After the sauce has cooled completely, store in an airtight container in the refrigerator for up to a week or the freezer for up to 3 months. (Be sure to label and date the container.)