Some housing bubble news from Wall Street and Washington. "U.S. homebuilders' sentiment dipped slightly in December, although they expressed greater confidence for mid-2007, the National Association of Home Builders said on Monday. The index fell one point to 32 but held above the 15-year low of 30 reached in September, the group said."

"Economists expected the index would rise to 34, based on the median forecast in a Reuters survey. Just three of 31 economists polled forecast a drop, with Citigroup Inc. and 4Cast Ltd. economists predicting a jump to 37. Readings below 50 mean more builders view market conditions as poor than favorable."

"The index of sales expectations for the next six months rose for a third consecutive month to 48 from 45 and its highest since June, even as the measure of prospective buyer traffic fell three points to 23."

The Associated Press. "A JPMorgan analyst on Monday downgraded Sealy Corp. because she thinks the world's largest bedding manufacturer will miss Wall Street's estimates for fourth-quarter earnings, amid a housing slump."

"'It appears the significant housing slowdown is having a substantial impact on industry demand,' analyst Dara Mohsenian said. She fears revenue could 'decelerate significantly' in 2007 as U.S. prices stagnate."

From Bloomberg. "The U.S. economy has cooled significantly in recent months, with growth slowing to 2.2 percent in the third quarter from 5.6 percent six months earlier, as a recession in the housing sector and a slump among car makers take hold."

From Business Week. "Treasury Secretary Hank Paulson traveled to China for his first strategic meeting with his Chinese counterparts. Do you think, as Wall Street's recent behavior seems to suggest, that the housing slump has bottomed out? I don't know whether it has bottomed out. The one thing I do believe is that we've had a correction that in many ways was inevitable and necessary."

"'The housing correction has taken about 1 percentage point off of GDP, so we're growing below our sustainable rate right now. So whether [housing] has bottomed out, not quite bottomed out, or is going to take a quarter or two longer."

Housing booms are short. are short and exciting. Housing busts, on the other hand, are long and painful. So don't put much faith in those oft-heard assertions that the worst is already over. Prices are likely to fall further in many markets in 2007."

"A BusinessWeek analysis of the past three decades shows that if history repeats itself, it's likely to take 15 years or more for many parts of the country to get back to their inflation-adjusted peaks."

"Advice to homeowners: If you need to sell and you're not getting much interest, cut the price by an extreme amount. If you make halfhearted cuts, you'll remain overpriced and you'll follow the market all the way to the bottom."

"Advice to buyers: Bargain hard. Many sellers are still asking for too much."

"'As tough as our market's been, the toughest thing is to get sellers to understand that prices aren't going up 18% to 20% a year anymore,' says Ned Redpath, head of Coldwell Banker Redpath & Co. Realtors in Hanover, N.H."

National Mortgage News. "An active secondary market has developed for buyback loans. As we went to press, one large subprime lender was coming to market with a $580 million portfolio of buybacks."

From MarketWatch. "Hovnanian is slated to release fourth-quarter results after the closing bell Monday. In November, the Red Bank, N.J., company warned it expected to post a quarterly loss on land charges."

"CEO Ara Hovnanian, at a recent industry conference, said the company isn't overly optimistic about the housing market's recovery and that it isn't managing as if 'everything will be hunky-dory in 2007.'"

"The CEO said the latest housing slump is different from previous ones because it wasn't triggered by an economic shock but by a sharp pullback in the confidence of buyers, who are reluctant to purchase a home 'that may be cheaper a month later.'"

From Bill Fleckenstein. "It is essential that folks understand the past, in order to prepare for what lies ahead. That the Fed was able to precipitate a housing bubble to bail out the equity bubble was a miracle. But there is no next bubble to bail out the housing bubble."

"The fact that the economic strength of the past few years was powered by a housing mania, an unstable, unsustainable engine of growth, is what one needs to understand to realize that the ramifications of the housing bubble's unwinding will be brutal."