Some housing bubble news from Wall Street and Washington. "Third-quarter profit at New Century Financial got cut in half, as the mortgage lender to people with poor credit histories saw a decline in loan production."

"A top executive at Caterpillar Inc. said late Thursday he believes 2007 will be a year of 'significant slowdown' in the U.S. housing market.

"Washington Mutual, the nation's largest savings and loan, is laying off 255 workers as part of its efforts to trim costs amid a downturn in the national housing market. Sixty-five layoffs in Sacramento, Calif., and 190 in Austin, Texas, will take effect by the end of December, spokeswoman Darcy Donahoe-Wilmot said Wednesday."

"Many of the jobs being cut are in the company's mortgage-related business, Donahoe-Wilmot said."

"Friedman, Billings, Ramsey Group Inc., the investment bank and brokerage, on Thursday reported a third-quarter loss. Separately, the company wrote down the value of a mortgage loan portfolio by $146.8 million. In addition, it wrote down equity positions in its merchant banking portfolio by $20 million, saying a majority of this sum relates to companies doing business in the subprime mortgage sector."

"Home prices fell from July to August in seven of the 10 major housing markets covered by the S&P Case Shiller indexes. But prices are heading down a lot more, if the investment pros who trade in housing futures can be believed."

"The latest report by the Labor Department showed construction companies got rid of 26,000 jobs."

"Earlier this year, S.A. Ibrahim's pitch that mortgage investors would benefit from insuring portfolios against a spike in borrower defaults fell on deaf ears. Now his phone is ringing. There is a heightened sensitivity to credit risk among investors, said Ibrahim, a 20-year veteran of the mortgage industry and former GreenPoint Mortgage CEO. 'A big disconnect between that and the behavior of credit spreads,' which have been tight, may soon reverse, he said."

"It may go down as the 'Got milk?' moment for the housing sector. Just as dairy associations, with their widespread ads, have tried to convince Americans of the many benefits of milk, the National Association of Realtors will begin promoting the notion that buying a home is an unalloyed good in a $40 million campaign that boldly declares: 'It’s a great time to buy or sell a home.'"

"'In visiting our local associations and state associations, we were hearing our members saying, 'God, we are getting beat up out there,' said Thomas M. Stevens, president of the trade group. Stevens dismissed the idea that the campaign, the first of its kind undertaken by the association, could be viewed as a sign of desperation."

"As the credit market has grown and become more sophisticated, lenders have been able to extend credit to households and businesses that might previously have been considered uncreditworthy, Federal Reserve Chairman Ben Bernanke said."

"'Some evidence, including recent Federal Reserve research on consumers holding adjustable-rate mortgages, suggests that awareness could be improved, particularly among borrowers with lower incomes and education levels,' Bernanke said."

"Dallas Fed President Richard Fisher said the Fed held its target rate at 1 percent 'longer than it should have been' and unintentionally prompted speculation in the housing market. The Fed was influenced by inflation figures, which have been revised upward, he said."

"In this case, poor data led to a policy action that amplified speculative activity in the housing and other markets,' Fisher said. 'Today, as anybody not from the former planet of Pluto knows, the housing market is undergoing a substantial correction and inflicting real costs to millions of homeowners across the country. It is complicating the task of achieving our monetary objective of creating the conditions for sustainable non-inflationary growth.'"

"Fed Governor Susan Bies told reporters that the economy is 'still running at a solid pace outside of housing.' While the housing slump may see even 'further softening,' that may be limited by 'relatively low' mortgage costs, income growth and recent stock-market increases, she said in her speech."

"'I am still more worried about inflation than a slowdown in economic growth,' Bies said to reporters."