Some housing bubble reports from Wall Street. "We know how D.R. Horton deals with success. Now we'll see how the Fort Worth company handles adversity. It won't be pretty, it won't be subtle, and it won't be alone."

"CEO Don Tomnitz laid out Horton's strategy for retrenchment after the company reported its first-ever decline in business. Some Horton plans are standard-issue, like laying off workers and cutting overhead by $200 million. Others are industry-specific, including a major reduction in speculative homes and land lots."

"It has also anticipated the housing bubble bursting, saying a downturn could work to its advantage. The company expects to pick up market share and perhaps some distressed competitors during a prolonged slump. Those plans are being tested."

"Tomnitz said, 'June absolutely fell off the Richter scale for us.' Horton responded by canceling option contracts for more land, eating the earnest money and other fees. Now the division presidents are pushing land sellers, who had agreed to an option price, to reduce it. 'It doesn't make any difference whether we're short [of] land in that market or not,' he said. 'We're basically using the excuse that the market is softer across the U.S. Across the board, we're asking for decreases in our land prices.'"

"Some land sellers are still in denial, and he wants the big write-off to send a message: 'The first loss is the best loss, and we're going to walk away if we can't get the land price correct,' Tomnitz said. Horton had 396,000 home lots, 43 percent of them secured through options. It plans to reduce that to 340,000 and get a 50-50 mix of lots owned and optioned."

"Subcontractors will get similar treatment, as Horton tries to drive down costs everywhere."

From Danielle DiMartino. "Many apologists for the housing industry remain insistent that because house prices have never fallen on a national level, they never will. Actually, they already have. Since the fourth quarter, median home prices have fallen about 1 percent, according to data Goldman Sachs mined from the National Association of Realtors."

"The numbers are even worse for condos. The median price of a condo nationwide has been falling at a 9 percent annual rate since the fourth quarter of 2005, according to Goldman Sachs."

"The average mortgage loan size is declining on an annual basis for the first time since 2001. And over the last year, the housing vacancy rate has risen at its fastest pace since data collection began in 1956. 'Since excess supply is perhaps the most 'leading' indicator of market weakness, we would strongly caution against the assumption that the housing downturn is already entering the end game,' Goldman added."

The Chicago Tribune. "A summer swoon for the housing industry is creating some restless nights. The struggle to sell a home, even after cutting the price, provides a ready explanation for the Federal Reserve"s decision last week to hold interest rates steady. The glut of unsold houses has hit historic highs, with mortgage rates near a 4-year peak.'

"As the nation's No. 1 driver of job creation, the construction industry can't afford to fall much further before other sectors of the economy feel a pinch."

"'Home building continues to decline, amid slowing sales and rising inventories. The overheated parts of the country, which include California, Las Vegas, Phoenix, parts of Florida and the Northeast, are seeing the biggest drops,' said economist Lynn Reaser, of Bank of America."

And a fund had these comments in their third quarter report. "The real estate bubble, whose existence had been denied for some time, primarily by those who stood to and did profit mightily from it, has clearly popped. Around the country, inventories of both new and existing unsold homes have hit five-year highs. Builders have adopted any number of 'incentives' to clear out inventory and batten down the hatches."

"Falling house prices, coupled with the increase in interest rates, have deprived many consumers of their last source of ready liquidity; the home equity and mortgage refinancing combination that many used as a giant piggy bank."

"In addition, a considerable number of home buyers opted for once-attractive adjustable rate mortgages, which are now adjusting upwards rather dramatically. Given these factors, it is easy to see that discretionary consumer spending is at risk."