Some housing bubble news from Wall Street and Washington. "Goldman, Sachs & Co. said Wednesday that it has been added as a defendant in lawsuits regarding mortgage financier Fannie Mae's accounting practices. The Wall Street powerhouse said the complaints allege that it violated laws, including U.S. securities laws, in arranging some Fannie Mae-sponsored bond deals."

"The deals involved real-estate mortgage investment conduits, which are bonds collateralized with mortgage-backed securities. The other defendants include Fannie Mae and some of its past and present executives, accountants, and other financial-services firms."

From Inman News. "The housing market downturn looks rougher than the soft landing housing analysts had been expecting. Although a soft landing is 'no longer in the cards' for housing, Nariman Behravesh, chief economist for Global Insight, said that the 'good news is that other sectors are doing reasonably well and will continue' to do so."

"During the recent boom, inflation-adjusted housing prices rose to record levels, and the market is paying the price for that rapid ascent now, with 'prices coming down off their own weight,' Behravesh said."

"Following an unsustainable boom in housing starts, sales and price appreciation in 2004 and 2005, 'we need a period of below-trend performance to work off excess inventory and improve housing affordability,' said National Association of Home Builders Chief Economist David Seiders. 'Mortgage rates are dropping; builders and sellers are offering all sorts of incentives and upgrades, energy costs are retreating and the national economy is moving ahead, making it a very good time to buy a home.'"

From Bloomberg. "Service industries in the U.S. expanded at the slowest pace in more than three years in September as the housing slump deepened. Homeowners extracted a net $497 billion at an annual rate from home equity in the second quarter, down from $649.2 billion in the first three months of the year, according to figures from Federal Reserve researcher James Kennedy."

"'We've had a major bubble that's bursting before our very eyes and it's going to take a big toll on growth prospects going forward,' said Stephen Roach, chief global economist at Morgan Stanley in New York."

"'The economy is slowing, but not at a great pace,' economist Joel Naroff said. 'The slowdown in housing has implications not just for construction, but also for finance, real estate; lots of ancillary places.'"

From MarketWatch. "Home and tower builder WCI Communities Inc.said it anticipates third-quarter new orders plunged 80% from a year earlier. WCI said it expects third-quarter earnings 'significantly below' its prior forecast."

"CEO Jerry Starkey in a statement said a $13 million write-off for options on land the company decided not to purchase was the biggest reason for the expected deficit. 'With the current slowdown in demand, we believe we own sufficient land to support our operations through the foreseeable future,' the CEO said. 'We have concluded that it is more prudent at this juncture to apply our cash flow from operations primarily towards debt reduction and stock repurchases.'"

"WCI said higher traditional and tower defaults are also expected to hit profits, while about 80 traditional homes valued at roughly $48 million had been slated for delivery in the third quarter but failed to close."

"'We think the most worrisome aspects were the rising cancellations in the tower business and what appears to be a lack of net orders,' BofA analyst Daniel Oppenheim said. 'We estimate that cancellations in the tower business essentially offset new orders, resulting in essentially no net orders for the quarter in the tower business.'"

"JMP Securities analyst Alex Barron said the 80 percent lower orders imply that tower orders were down about 99 percent in the quarter to about five units. 'These low order numbers are driven by a low level of demand for homes in Florida, increasing cancellations, and only one recently launched tower that converted to contract last quarter,' Barron wrote in a client note."

From USA Today. "Investors hurt by the sharp slide in home-builder stocks might now wish they'd kept a closer eye on what industry executives were doing with their own holdings."

"CEOs of three of the top eight U.S. home builders sold large amounts of stock last year and avoided some of the financial pain since the shares peaked. There's nothing wrong or illegal when a CEO sells company stock, says Todd Henderson, professor at the University of Chicago Law School. 'There can be a ton of reasons why executives may be selling,' he says."

"Still, some say the timing of the selling in the industry gives reason for pause. 'It's always a question: Is the timing lucky or is there something more?' says Jill Fisch, professor at Fordham Law School."