Some housing bubble news from Wall Street. MarketWatch, "D.R. Horton Inc., the nation's largest home builder, said Tuesday that net income fell about 65% as the company took land charges and write-offs on options it plans not to pursue. The company's quarterly net income included charges of $40.9 million of inventory impairments and $36.8 million of write-offs on land options."

"'We're in the very early stages' of the current housing slowdown,' CEO Donald Tomnitz said. 'Most of these downturns are longer and deeper, and right now we don't see anything on the horizon that would change that opinion,' the CEO said. 'We continue to see a very challenging industry environment for fiscal 2007,' he added. "

"'We continued to focus on improving our strong balance sheet and reducing our inventory while managing our business profitably,' said Chairman Donald Horton, adding conditions in the home-building industry 'remain challenging.'"

"He said the company reduced its lot position by 25% from its March 2006 peak to 297,000 lots owned and controlled. It also cut the number of homes under construction to about 26,000, down 35% from a high reached in June 2006."

From Reuters. "Home-building revenue stayed the same at $2.8 billion, as margins deteriorated 9.2 percentage points to 18.6 percent. Earlier in January, Horton said orders during the quarter fell 23.5 percent to 8,771 homes, with the drop the most severe in the Northeast. The value of the homes on order declined even more, down 28 percent to $2.3 billion, as the company used incentives to lure buyers."

"Would-be buyers canceled orders at a rate of 33 percent, down from 40 percent the prior quarter, but still higher than its normal range of 16 percent to 20 percent."

From Bloomberg. "Another homebuilder, Centex Corp., the fourth-largest by revenue, will report earnings after the close of trading today. The Dallas-based company said on Jan. 16 it would report a loss from continuing operations of $2 a share in the fiscal third quarter after recording about $450 million in land writedowns and expenses to cancel property options."

Modern Distribution Management. "BlueLinx Holdings Inc., Atlanta, GA, distributor of building products, reported revenue for the fourth quarter 2006 declined about 29% to $945 million from the same period a year ago. The company's business that is tied to new home construction was negatively impacted by the slowdown and depressed wood-based structural product prices. BlueLinx reported a net loss for the quarter."

"'The fourth quarter was one of the most difficult building product environments related to new home construction that we have experienced in decades,' said CEO Stephen Macadam. 'A 25% reduction in new home construction from year-ago levels and low wood-based structural product prices combined to severely pressure our business related to this sector. Our business was further impacted as customers reacted to this environment by reducing their own inventory levels.'"

The News & Observer. "Stock Building Supply, one of the nation's largest building-material suppliers, is cutting 1,500 jobs as the U.S housing slump depresses sales and profit."

"Raleigh-based Stock said in November that it was cutting 2,000 jobs. The latest round of layoffs was announced Monday by the company's British parent, Wolseley Plc, which also is closing 22 Stock branches and cutting 500 jobs at its Ferguson plumbing division, which is headquartered in Virginia."

"Officials blamed the company's worsening financial condition on builders starting fewer new houses and a decline in lumber prices. 'We've responded swiftly to the challenging market conditions as a significant amount of our business is in residential construction,' Stock VP of finance Jim Major said."

"'The jury is still out,' said Kevin Lapwood, an analyst at Seymour Pierce in London. New home sales in the U.S. appear 'to be leveling out, but there may be some more pain before there's gain,' he said."

"The housing industry needs to rid itself of a huge number of unsold homes, suggesting that new residential construction will continue to drop through the middle of the year, said Greg Geiber, a housing analyst for A.G. Edwards."

"'We've never had so much inventory in the industry,' Geiber said, adding that homes are still priced too high to sell quickly. 'A lot of people think buyers will be back, but I don't think so until there are more meaningful cuts in house prices.'"

"Freddie Mac's retained portfolio of mortgages shrank by an annualized 1.2 percent in December to $703.6 billion, the second-largest U.S. home funding company said on Tuesday."

"'Sales, net of other activity, continued to be depressed as the market has slowed for structured product, while the purchases during December fell as mortgage-to-debt spreads continued to tighten,' said Freddie Mac spokesman Michael Cosgrove."

The Journal Sentinel. "How homeowners who have adjustable-rate mortgages cope with the coming increase in their monthly payments will play a role in whether consumer spending slows in the new year, the former chief economist for the National Association of Realtors said."

"Economist John Tuccillo said that with more than $1 trillion in adjustable-rate mortgages set to reprice upward this year, homeowners are looking at a 25 percent rise in the amount of house payments unless they refinance. If the burden of bigger payments is substantial, it will be felt in the rest of the economy, Tuccillo said."

"'The degree to which consumers react to that repricing by absorbing higher mortgage payments will determine how consumption spending goes for the rest of 2007,' said Tuccillo. 'If they have to eat large increases in their mortgages, they are going to reduce spending on other goods and services, and that is going to have an impact on the economy.'"