Some housing bubble reports from Wall Street and Washington. "U.S. home prices will probably fall temporarily as the housing market corrects, the National Association of Realtors said Thursday. 'This year sales are slowing, homes are plentiful and sellers are negotiating,' said David Lereah, chief economist for the real estate group. 'Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory.'"

"Lereah said home prices typically appreciate at the rate of inflation, plus one or two percentage points. Buyers who plan to stay in their homes should see those gains, but 'people who purchased last year with the intent of flipping are likely to get burned,' he said."

"'The shift we've seen lately results from psychological factors with buyers on the sidelines trying to time the market,' NAR President Thomas Stevens said in explaining the sharp shift in the group's forecast."

From Bloomberg. "KB Home, the sixth-largest U.S. homebuilder, and Beazer Homes USA Inc. said profit will fall short of earlier forecasts as demand wanes. 'The housing bubble is breaking pretty hard here,' said (analyst) Michael Bugno."

"Beazer cut its fiscal 2006 forecast yet again on lower sales and higher contract cancellations in a weakening U.S. housing market. The company said it was selling fewer homes in the current quarter and purchases were being delayed or cancelled as buyers were unable to sell their existing homes."

"The company also said it was aligning its overhead structure and capital spending in the wake of deteriorating business conditions. Today's forecast cut by Beazer Homes was its third in just over four months."

"Short-term housing investors, so-called 'flippers,' are exiting the market in droves and putting their properties up for sale, making for 'an increasingly challenging housing market,' KB Home Chief Executive Bruce Karatz said in a statement yesterday that detailed the builder's 43 percent drop in new orders."

"'Our earnings expectations for the third quarter and full year reflect an increasingly challenging housing market, where the supply of new and resale home inventories has built up in recent months in markets that have experienced rapid price appreciation or substantial investor activity, or both, in the past few years,' said Karatz. 'Further intensifying the unfavorable conditions in the housing market is the weaker than expected demand for new homes.'"

"Bank of America analyst Daniel Oppenheim attributed the rise in cancellations to declining home prices and small deposits, adding that cancelations would not likely stabilize anytime soon."

"Competition among builders to sell homes has led builders to accept smaller deposits during challenging times, worsening the industry's woes, Oppenheim wrote. 'We expect cancellations will remain at elevated levels as long as sequential pricing trends continue to worsen,' Oppenheim wrote. 'We should expect to see high levels of cancellations as long as buyers see that they could purchase a home for less today than their agreed upon contract price.'"

"Home builder Hovnanian Enterprises reported yesterday its profit sank 36 percent for the third quarter as the company struggled with higher costs, slower-paced orders and increased cancellations in a slowing real-estate market. CEO Ara Hovnanian said, 'We are making decisions today with the assumption that current conditions will persist for the foreseeable future.'"

"(Analyst) Alex Barron said that's the right outlook if it means the company figures the cancellation rate will remain high, home prices will drop and builders will have to keep offering costly incen tives to persuade people to buy. 'A lot of buyers are not willing to close homes any more because they think they're afraid they're going to lose value,' Barron said."

"'I think you'll expect more pre-announcements, more lowering of guidance, more missing estimates, orders coming in below expectations, yada yada,' said Barron. 'It's just starting. It's only the 3rd inning of the downturn.'"

"A U.S. housing sector downturn may last for years because of excess supply and faltering consumer confidence stemming from worry over U.S. foreign policy and federal government competence, the head of nation's largest builder of luxury homes said."

"Robert Toll, CEO of Toll Brothers said the current slump in prices and sales volumes was more severe than the 'soft landing' for housing predicted by some analysts. He said the market recalls the recession of the late 1980s when prices took more than three years to recover. 'This isn't a soft landing, it's harder than a soft landing,' Toll told Reuters."

"The current downturn is mostly the result of a 'severe overhang' in supply that Toll estimated at 15 percent to 20 percent more than the market can easily absorb. That was driven by 'tremendous speculation' by home buyers who never intended to occupy seeking a quick profit from a rising market, and by builders who constructed homes before securing buyers, he said."