Housing starts took another dive in May, continuing the contraction in the supply of new homes that began in 2006 and sinking to their lowest level since March, 1991.

Starts in May fell 3.3% from April to a seasonally adjusted annual rate of 975,000, a point reached in only four periods since the Commerce Department began collecting data in the late 1950s. Those periods included 1966-'67, 1974-'75, 1980-'82 and 1990-'91. Year-over-year, starts were off 32.1%.

Single-family starts in May were at a rate of 674,000, a drop of 1.0% from April. Compared to May, 2007, single family starts were down 32.1%.

Permits fell 1.3% to a seasonally adjusted annual rate of 969,000, not quite the 17-year nadir of March, when the rate fell to 932,000. Year-over-year, permits were down 36.3%.

Single family permits, however, were down 4% from April to 623,000, also slightly above the 17-year low reached in March of this year.

Completions were up 11.6% from April to a seasonally adjusted annual rate of 1,132,000, 26.9% below the revised May 2007 rate of 1,549,000.Single-family completions were up 8.9% to a rate of 869,000, 26.9% below May, 2007.

In a note to investors, J.P. Morgan home building analyst Michael Rehaut pointed out that May marked the 13th consecutive month of declines in single family starts. However, he wrote, "While a continued drop in starts might be viewed as a positive from a supply standpoint, we continue to believe the still highly elevated levels of existing-home inventory, at nearly 10 times the size of new-home inventory, remains the more pressing core problem for the industry." He added, "The continued drop in starts and permits reinforces our view that a trough in housing has yet to emerge."