Housing news from Wall Street and Washington. "U.S. homebuilders started work on fewer homes in June as higher mortgage rates discouraged buyers. Would-be homebuyers are moving to the sidelines, dissuaded by the highest mortgage rates in four years and prices that are still above year-ago levels."

"Starts of single- family homes fell 6.5 percent in June to a 1.486 million-unit rate. Starts fell in every region except the Midwest. They fell 12 percent in the Northeast to 170,000, 4 percent in the South to 911,000 and 10 percent in the West to 460,000."

"The number of homes under construction fell 1.2 percent in June to a 1.381 million pace, the lowest since October. Housing completions rose 6.4 percent to an annual rate of 2.017 million. The number of housing units authorized, but not yet started, rose 1.6 percent to 233,000."

"Home builder Ryland Group Inc. said early Wednesday that second-quarter net income fell 9% from the year-ago period and lowered its 2006 profit outlook for the second time as the U.S. housing market continues to unravel."

"Gross profit margins on home sales in the quarter averaged 23.2%, down from 24.5% a year earlier. The drop was primarily due to $20 million of inventory write-downs and increased sales discounts."

"For the quarter, new orders for homes fell 39% to 3,023 units, with the dollar value dropping 40% to $890.8 million. The company's backlog at quarter end was valued at $2.5 billion, an 18% decrease from a year earlier."

"Downey Financial Corp. reported that net income for the second quarter of 2006 (was) down 22.7% from the year-ago second quarter. The decline in net income between second quarters primarily reflected: A $40.2 million decline in net gains on sales of loans and mortgage-backed securities..A $6.1 million increase in provision for credit losses."

"During the current quarter, California residential real estate markets continued to show signs of slower sales and flattening home values. In addition, the amount of negative amortization associated with option ARM loans continued to increase and 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 payment and the potential for higher delinquencies."

"As of July 31, 2005, Downey operated 173 branches, of which 169 were in California and 4 were in Arizona."

From the Fed chairman. "As I have noted, the anticipated moderation in economic growth now seems to be under way, although the recent erratic growth pattern complicates this assessment. That moderation appears most evident in the household sector."

"Outlays for residential construction, which have been at very high levels in recent years, rose further in the first quarter. More recently, however, the market for residential real estate has been cooling, as can be seen in the slowing of new and existing home sales and housing starts."

"Some of the recent softening in housing starts may have resulted from the unusually favorable weather during the first quarter of the year, which pulled forward construction activity, but the slowing of the housing market appears to be more broad-based than can be explained by that factor alone."

"Home prices, which have climbed at double-digit rates in recent years, still appear to be rising for the nation as a whole, though significantly less rapidly than before. These developments in the housing market are not particularly surprising, as the sustained run-up in housing prices, together with some increase in mortgage rates, has reduced affordability and thus the demand for new homes."