Some housing bubble reports from Wall Street and Washington. "Construction spending fell in May by the largest amount in nearly two years as the once booming housing sector suffered another big decline. The Commerce Department reported that building activity dropped by 0.4 percent in May, following a 0.2 percent fall in April. It marked the first time in more than three years that construction spending had fallen for two consecutive months. May represented the biggest one-month decline since a 0.7 percent fall in September 2004."

"'(Economist) Ken Mayland said the drop shows 'the foundations for the housing boom are beginning to crack.'"

From Reuters. "Fannie Mae on Friday announced the second member of its board of directors to resign in the last seven weeks, saying that Donald Marron would leave the board on July 31. His resignation comes just over a month after a scathing report from Fannie Mae's regulator blamed the company's management, its board and an 'arrogant and unethical' culture for massive profit manipulation and an $11 billion accounting scandal."

From Paul Muolo at National Mortage News. "The House has passed a flood insurance reform bill by a 416-4 vote that eliminates subsidized premiums on vacation and second homes and commercial buildings, affecting an estimated 450,000 properties. Federal flood insurance premiums on those properties would increase 15% a year until they reach the 'applicable risk premium rate.'"

"Mortgage originations could take off again in 2008, according to Jeff Speakes, chief economist for Countrywide Home Loans. Speaking before a mortgage broker convention, Mr. Speakes pointed out that residential loan production has shot higher every five years since the mid-1990s. Mr. Speakes advised brokers that if they can hold on through next year, brighter days are on the horizon."

"Meanwhile, brokers and mortgage bankers fear the Federal Reserve won't stop ratcheting up short-term interest rates. Some fear that the Fed has now gone too far."

From Bloomberg. "Barclays Capital Inc. forecast the Fed's target rate will reach 6 percent by the end of the year. JPMorgan Chase & Co. and Credit Suisse Group made similar calls for next year."