Yeah that's what's going on. It's called "crating" the dog. He's already house-trained and well-trained in general, though a bit feisty and tries to dominate (I thought it was the pit bull side of him but it turns out it might be the shar-pei side, go figure).
The folks at the shelter recommended keeping him crated until he's acclimated to his new home. I'd rather let him roam free in the backyard, but they recommended against that for some reason. He seems a lot happier in the backyard, but maybe he'll try to escape, though that doesn't seem likely since he seems very loyal and even dependent on his owner.
My first dog by the way, so it's almost like having a first child. Lots to learn and experience.