Some housing bubble news from Wall Street and Washington. "Ryland Group Inc. became the second home builder this week to lower its 2006 profit forecast, and analysts tracking the sector expect more negative pre-announcements as the housing market cools. The Calabasas, Calif., company late Wednesday reported that second-quarter home sales are running 35% lower than last year's."

"This is the second time Ryland has reduced its profit outlook for 2006. 'We do not expect Ryland to be alone in announcing sharp declines in orders and [we] expect more preannouncements in the coming weeks,' wrote analyst Daniel Oppenheim. 'It appears to us that Ryland's business strategy of holding the line on pricing at the expense of volume in order to protect margins is leading to [worse-than-expected order declines] in today's more competitive environment,' said (analyst) Carl Reichardt."

"Analyst Gregory Gieber noted Ryland is the first builder to guide to a year-over-year decline in per-share earnings for 2006. The company's second-quarter earnings estimate is less than what its backlog of homes awaiting construction would indicate, 'suggesting that Ryland has seen a surge in cancellations,' said Gieber."

"Three of the scariest words in economics used to be 'inverted yield curve.' The inversion early Wednesday was different than the inversion that occurred late last year and early this year, when the 10-year Treasury yield fell below the yield on shorter-term Treasury securities."

"Wednesday's inversion came as the 10-year yield fell briefly below the fed funds rate, the Fed's short-term rate target, currently 5 percent. It was the first time that's happened since April 2001, the last time the country was in a recession."

"Under scrutiny for questionable accounting practices beginning in 2004, mortgage giant Fannie Mae quietly tried to turn the tables on its federal watchdog by flexing its lobbying muscle and enlisting congressional allies to fire back at investigators, according to a report."

"In particular, the lending giant won help from Sen. Kit Bond. Twice in 2004, Bond did the company's bidding by asking the Department of Housing and Urban Development's inspector general to investigate the Office of Federal Housing Enterprise Oversight, the HUD agency that was investigating Fannie Mae at the time."

"The revelations about Bond's involvement in the issue were tucked into a 340-page report Fannie Mae's federal regulator released Tuesday before announcing that the lending giant would pay $400 million in fines."

"'I think the company at the highest levels thought that the HUD Inspector General's report would discredit or show the lack of objectivity in the OFHEO report in September or at least the preliminary report,' Duane Duncan, Fannie Mae's top lobbyist, told investigators, the report said."

"OFHEO investigators found on Fannie Mae computers a draft that was nearly identical to the Bond letter but was dated two weeks before the actual letter was sent, according to the report. Duncan confirmed in testimony that Bond's letter was sent at Fannie Mae's request."

"Washington Mutual will lay off about 550 workers this summer at its regional operations center in Baymeadows. The local layoffs weren't the only ones announced Tuesday. 'We also announced 850 additional jobs [will be cut] for the same unit for a facility north of Seattle,' Nova Barnett said."

From the Associated Press. "The median price of homes sold in April rose 4.2 percent from April 2005. That represented the smallest year-over-year price gain since September 2001. Sales of condominiums fell 2.7 percent to an annual rate of 839,000 units."

"The sales price for condominiums fell by 0.2 percent, the first year-over-year price drop since the spring of 1995."

"For April, the total number of unsold homes hit a new record of 3.38 million units. 'Inventory levels are simply out of sight,' said Joel Naroff, chief economist at a private consulting firm. 'Something has got to give and that is likely to be prices.'"