The U.S. Commerce Department reported last week that new home starts were down 3.3 percent in May -- the lowest in 17 years.

"Builders are doing the right thing by slowing new production in view of the very weak demand in the market and reluctance of prospective buyers to move forward with a purchase at this time," noted National Association of Home Builders (NAHB) President Sandy Dunn, a home builder from Point Pleasant, W.Va. "Production of new homes won't pick up until the demand side does, and it's going to take some decisive policy action on the federal level for that to happen. It's high time for Congress to move on a housing stimulus package that will substantially bolster our weakened national economy."

Housing starts are down in every region but the Northeast. The Midwest saw the biggest drop -- down 25 percent from the previous month.

The NAHB also reports that building permits, which can be an indicator of future building activity, were down 1.3 percent overall in May to a seasonally adjusted annual rate of 969,000 units. Single-family permits fell 4 percent in the month to a rate of 623,000 units, while multifamily permits rose 3.9 percent to 346,000 units.