The supply of single-family MBS outstanding in the market declined again in the first quarter of 2011, hitting its lowest level since the third quarter of 2007, according to an Inside MBS & ABS analysis of new agency data. Single-family MBS totaled $6.564 trillion as of the end of March, down 0.4 percent from the end of 2010. The single-family MBS market peaked in the third quarter of 2009 at $6.981 trillion and has been in steady decline since then. That’s largely because the supply of home loan debt has been declining since early 2008 as house values have eroded, cash-out refinance activity has...[includes one data chart]