Some housing bubble news from Wall Street and Washington. "Toll Brothers Inc. on Thursday said the weak U.S. housing market drove down its quarterly profit 67 percent after write-downs for lower land values, and the luxury home builder lowered its forecast. The results included write-downs of $96.9 million for the lower value of the land Toll owns or from forfeiting payments for land options Toll decided not to exercise."

"Investors, home builders and other industry watchers have been looking for signs of an upturn, but Toll's chief executive expressed caution. 'There are too many soft markets at this stage of the selling season to call a general upturn in the new home market,' CEO Robert Toll said in a statement. 'Demand varies greatly from week to week in individual markets.'"

From theStreet.com. "New home orders fell 33% to 1,544 units. The steepest drop came in the Western region of the U.S., where orders fell 65% from a year earlier amid particular weakness in Arizona, California, Colorado and Nevada."

"Bank of America analyst Daniel Oppenheim said he views Toll's comments as less positive than two weeks ago, when the builder reported its orders for the quarter and signaled an uptick in demand in January and early February."

"'We think this [less positive commentary] is a reflection of choppy market conditions and the soft traffic at the start of the spring season, consistent with what we have seen in early results of our February Survey of Real Estate Agents,' Oppenheim wrote."

"Oppenheim said his research shows that an expected increase in buyer traffic in February has not happened so far. He said his traffic index, which polls real estate agents on customer volume, is likely to fall in the month after three consecutive gains."

"'Agents attributed the easing of traffic to the perception that prices will be lower in coming months,' Oppenheim wrote in a note to investors. 'The weather does not appear to be the driver.'"

"'We believe further price cuts are needed to bridge the gap between the pricing expectations of buyers and sellers,' Oppenheim said."

"'We see risk from continued pricing declines (necessary to remedy the excess inventory), which will negatively impact earnings expectations along with the potential for inventory levels to worsen further at the start of 2007,' Oppenheim said."

The Vancouver Sun. "Top American homebuilders are walking away from deposits on land options, a clear signal that the slumping U.S. housing market has yet to bottom out, according to a research report by the International Wood Markets Group."

"'When I look at the data, I don't believe the builders think the worst is over,' report author Peter Butzelaar said, referring to $1.4 billion the top 10 builders collectively wrote off their balance sheets for the last three months of 2006. 'To me, you don't write off future opportunity unless you don't believe there is an economic opportunity there.'"

From Reuters. "Moody's Investors Service on Wednesday said it may cut its servicer quality ratings on NovaStar Mortgage, Inc. due to the mortgage servicer's exposure to weakness in the subprime mortgage market."

"'NovaStar, like a number of other independent subprime mortgage finance companies, is facing lower profitability as well as potentially an increased level of liquidity risk given current market conditions,' Moody's said in a statement."

"NovaStar late on Tuesday surprised investors by saying it may generate no taxable income from 2007 to 2011, and may drop its tax-friendly real estate investment trust status in 2008.."

From MarketWatch. "The company said that certain reports 'erroneously stated' that it doesn't expect to be profitable from 2007 through 2011 and that it believes it will 'generally be profitable' as calculated in terms of generally accepted accounting principles over the next several years."

"'Our comments about 2007 to 2011 related to taxable income, as part of our discussion of a potential change in NovaStar's real-estate investment trust status,' the company said."

From Business Week. "'While NovaStar's results were disappointing, the guidance of little to no taxable income from 2007 until 2011 was unexpected,' Deutsche Bank analyst Stephen Laws said."

"'If delinquencies in NovaStar's mortgages continue to rise, pullback from investors in its securities could create a liquidity crunch, limiting NovaStar's ability to originate new loans in the future,' analyst Ryan Lentell wrote Feb. 9. After NovaStar's news on Feb. 21, Lentell added that 'liquidity remains our number-one concern associated with the firm.'"

"One passionate supporter of NovaStar went so far as to start a Web site to rebut negative reports on the company. Yesterday, in what he described as 'probably my last writing here,' the investor had this to say on the site: 'I am shell shocked after the conference that took place yesterday, and quite annoyed that I participated in the collective hallucination that led so many into such a disaster.''

"Michael Simonsen, CEO of Altos Research, which studies California and 15 other major U.S. real estate markets, says subprime lenders' recent performance is 'one of the scariest signs' for the larger housing market."

"'The majority of the subprime business is with first-time buyers. So it may take several years to shake out,' Simonsen says. 'But when it comes time to sell and trade up we may find that the low end has been squeezed out.' In other words, a meltdown in the subprime market could affect the supply of future buyers for years to come."

The Financial Times. "A key derivative index that tracks the credit risk of high-risk mortgage-backed bonds hovered near record levels. 'The market is still searching for a level where people feel they are being fairly compensated for the risks they're taking,' said Alex Pritchartt, a trader at UBS."

From Bloomberg. "Prices for credit-default swaps linked to 20 securities rated BBB-, the lowest investment grade, and created in the second half of 2006 fell 3.9 percent to 78.59 today, and are down 19 percent since being introduced Jan. 18, according to Markit Group Ltd."

"The drop in the ABX-HE-BBB- 07-1 index means an investor would pay more than $1.1 million a year to protect $10 million of bonds against default, up from $389,000 last month."

"'It's been a one way train,' Dan Ivascyn, a managing director at Pacific Investment Management Co., manager of the world's largest bond fund, said in an interview. 'There's been selling from a lot of different areas, and there's not a natural buyer.'"

"'Somewhere in the mid-3s to around 4 percent' of the mortgages that NovaStar sold last year experienced 'early payment defaults,' or missed payments within the first few months that allow loan buyers to force repurchases, NovaStar Chief Investment Officer Mike Bamburg, said on a conference call yesterday. That was up from about 1.25 percent in 2005, he said."

"Janet Yellen, president of the Federal Reserve Bank of San Francisco, is sleeping better than she was a year ago, thanks to signs of stabilization in the housing market. Last year, when it looked like the housing downturn could turn into a bust, Yellen said she found it more difficult to sleep."

"'I'm waking up less at night than I was,' she said."