Some housing bubble news from Wall Street. "D.R. Horton Inc, the largest U.S. home builder, said on Tuesday its fiscal second quarter earnings rose 20 percent on higher home sales, but its shares fell on a tepid outlook that was reinforced by government data. 'The overall tone wasn't great. They didn't give a tremendously robust outlook,' analyst Gregg Schoenleber said. 'They thought the market would probably be in a better position today.'"

"For the second quarter ended March 31, Horton reported earnings of $1.11 per share, one cent short of what analysts on average had expected. Since the start of the year, Horton shares have lost 9 percent of their value, while the Dow Jones U.S. Home Construction Index has fallen 8 percent."

"Wells Fargo said its mortgage business slumped but first-quarter profit rose 9 percent from the year-ago period. Wells Fargo, one of the nation's largest mortgage lenders, felt the impact of the slowdown in the housing market in the quarter. The bank said home mortgage revenue declined 43 percent."

"Downey Financial Corp. reported that net income for the first quarter of 2006 (was) down 13.5% from the year-ago first quarter. Daniel D. Rosenthal, President and CEO, commented, 'Our portfolio of option ARMs, which represents 92% of our single family portfolio, had a weighted average loan-to- value ratio of only 72% at the time they were originated and borrowers were qualified based on fully-indexed interest rates. These loans do present greater credit risk in sustained periods of rising interest rates, as borrowers may see their loan payments increase significantly when their payments recast to fully-amortizing payments.'"

"'In addition, credit risk increases if home values decline. In light of continued increases in market interest rates and changes we are beginning to see in the residential market, such as an increased level of unsold homes and relatively flat home prices on a sequential month basis, we recently instituted pricing changes for the option ARMs we originate for portfolio by increasing the initial start rate and thereby lowering their potential for negative amortization.'"

"'Since our new start rate is now higher than those of many of our competitors, our production of option ARMs for portfolio may not offset loan payoffs. We are offering other types of adjustable rate product for portfolio that do not permit negative amortization, but those products are currently not as popular with borrowers.'"

The press release continues, "During the current quarter, certain segments of the California residential real estate market began to show signs of slower sales and flattening home values on a sequential month basis. In addition, increased usage of negative amortization associated with option ARM loans may result in certain borrowers reaching their limit of negative amortization permitted under the terms of their loan, thereby resulting in an increase in their minimum monthly loan payments and the potential for higher delinquencies.'"

And a Fed official spoke, "San Francisco Fed chief Janet Yellen said cooling housing prices and the impact of the Fed's gradual tightening were behind her expectation for economic activity to simmer down after a strong first quarter. 'While I expect the housing sector to slow somewhat, I will be highly alert to the possibility of the policy tightening going too far,' she said."