Some homebuilder news. "KB Home, one of the largest homebuilders in the United States, today reported financial results for its second quarter ended May 31, 2006."

"'We are now operating in a more difficult market environment,' KB CEO Bruce Karatz said. 'The country's current-year home sales will likely fall well short of the record rates we have seen in the recent past as the market works through inventory build-ups, including a spike in investor/speculator resale inventory, higher interest rates and higher cancellation rates.'"

"New orders during the quarter fell 19 percent to 9,908 chiefly from more prospective buyers canceling their orders. 'The impact of higher cancellation rates is evident in the substantial year-over-year decline in our net orders in the second quarter. These conditions will likely persist at least through the remainder of 2006,' Karatz said."

"'KB Home generated solid second-quarter financial results in a progressively more challenging housing market that is struggling to find equilibrium,' said Karatz. 'In many regions across the country, market performance has receded from the all-time highs established in recent years, largely due to a sharp reduction of speculative purchases and an over supply in new and resale inventory.'"

"'Given the decline in new home demand and increase in new and existing home supply, we believe it is prudent to revise our 2006 earnings forecast downward,' Karatz said."

"The Company repurchased two million shares of its common stock during the three months ended May 31, 2006. Over the six-month period ended May 31, 2006, the Company repurchased four million shares. The Company currently is authorized by its board of directors to repurchase up to an additional six million shares and plans to continue repurchasing its shares through the remainder of the year."

From MarketWatch. "Morgan Stanley on Thursday lowered its industry view on home-building stocks to cautious from attractive, citing order declines and rising inventories. 'A cooling housing market coupled with higher mortgage rates (especially on the shorter-term ARM products) prompted significant levels of inventory to enter the market, which in turn, overwhelmed demand,' Morgan Stanley said."

"In spite of solid employment data, higher inventories created a 'domino effect' as potential buyers are sitting on the sidelines to see how the market shakes out, the analysts added."

"Analysts at Susquehanna Financial Group and JMP Securities also Thursday lowered their estimates on the builder group. 'Late May and early June became the season of confession for builders, as one after another lined up to spill the beans on a very pathetic selling season,' Susquehanna said."

"JMP knocked down its estimates on several builders, saying it sees 2007 earnings falling between 20% and 40%. 'Although we had anticipated sales would decrease at a faster rate than the market's expectations, we too were surprised by the magnitude of the drops and in particular by how quickly margins have deteriorated," the broker said."

From TheStreet.com. "The Washington D.C. housing market continues to see far fewer home orders because of the rising inventory levels in the region, which is hurting homebuilders. Contracts in the greater metro region fell 40% in May, and closings declined 32%, according to a research note from Raymond James analyst Rick Murray."

"'Conditions appear to be deteriorating in the D.C. market and we suspect stabilization will not come for some time as immense speculation over the past few years will weigh on the market for some time,' Murray wrote."