Some housing bubble news from Wall Street and Washington. "Existing home sales posted their sharpest drop in 18 years in March, a real estate group said Tuesday, as the latest reading on the troubled housing sector came in much weaker than economists had forecast. Sales slowed to an annual pace of 6.12 million homes in March, according to the National Association of Realtors, down 8.4 percent from the 6.68 million rate in February. It was the biggest one-month drop since January 1989."

The Associated Press. "The fall in sales in March...dashed hopes that housing was beginning to mount a recovery after last year's big slump. David Lereah, chief economist at the Realtors, said that the troubles in mortgage lending were also playing a significant part in depressing sales."

"'The negative impact of subprime is considerable,' Lereah said. 'I expect sales to be sluggish in April, May and June.'"

"There was weakness in every part of the country in March. Sales fell by 10.9 percent in the Midwest. They were down 9.1 percent in the West, 8.2 percent in the Northeast and 6.2 percent in the South."

"NAR President Pat Vredevoogd Combs, and vice president of Coldwell Banker-AJS-Schmidt, said market conditions are clearly favoring buyers. 'It’s a good time to buy, in part, because home buyers are not pressured to make quick decisions,' Combs said. 'We’re in a window of low interest rates with a plentiful supply homes on the market and flat prices in most areas. First-time buyers now have more power to negotiate with sellers for help on downpayment or closing costs.'"

From Bloomberg. "The supply of homes for sale decreased 1.6 percent to 3.745 million last month. At the current sales rate, that represents a 7.3 months' supply, the highest since October, compared with 6.8 months' worth at the end of February."

"Last year, 6.48 million previously-owned homes were sold, the third-highest on record."

"Another industry report earlier today showed a measure of home values in 20 metropolitan areas, the S&P/Case-Shiller home- price index, declined 1 percent in February from a year earlier, the biggest price drop since the index started in 2001."

"S&P/Case Shiller's 10-city composite, which has a longer history, dropped 1.5 percent in the 12 months ended February, the most since October 1993."

"In 20 metropolitan areas...thirteen cities showed a year-over-year decline in prices, led by a 7.8 percent drop in Detroit and a 5 percent decline in San Diego."

"Housing markets including California, Florida and Arizona 'are becoming tougher' for sellers, said Donald Tomnitz, CEO of D.R. Horton Inc. the second-largest U.S. homebuilder. 'We're back to rock-bottom pricing in California,' Tomnitz said on a conference call."

"'Home prices are exhibiting successive monthly declines,' economist Robert Shiller said. He said the numbers indicate 'a widespread downward trend' that started at the end of 2006 and has extended into the beginning of this year."

"When compared to January, the February sales figures show that 17 of 20 cities had price depreciation, S&P said."

From Reuters. "Losses on risky subprime loans originated in 2006 may climb to 6 percent to 8 percent of the loan principal, higher than previous forecasts, according to Moody's Investors Service."

"'Delinquencies and early defaults for mortgage loans originated in 2006 continue to trend higher than in previous years,' the rating company said."

"Bond investors who financed the U.S. housing boom are starting to pay the price for slumping home values and record delinquencies in subprime loans."

"They will lose as much as $75 billion on securities made up of millions of mortgages to people with poor credit, says Pacific Investment Management Co., manager of the world's biggest bond fund. Some of the $450 billion in subprime mortgage-backed debt sold last year has lost 37 percent, according to Merrill Lynch & Co."

"'Bond investors will be the ones who will take the losses,' not the banks, said Scott Simon, who oversees $250 billion in asset-backed securities at Pimco."

"About two-thirds of mortgages get turned into bonds, up from 40 percent in 1990, when the market was $1.08 trillion and the country suffered its last real estate slump, according to data from the Federal Reserve and Fannie Mae in Washington."

"About 13 percent of subprime mortgages made in 2006 were delinquent after 12 months, with 6.65 percent considered 'seriously delinquent,' or more than 90 days late, Standard & Poor's estimates."

"'Underwriter standards have gotten progressively more lenient,' said Mark Tecotzky, chief investment officer at Ellington Management Group LLC, a $4 billion hedge fund that invests in mortgage bonds."

"Bondholders are as much to blame as lenders, Federal Deposit Insurance Corp. Chairwoman Sheila Bair in Washington says. 'We should hold the servicers' and the investors' feet to the fire on this,' Bair said in testimony to the House Financial Services Committee last week. 'We did not have good market discipline with investors buying all these mortgages.'"

"Subprime mortgage bond sales grew to $450 billion last year from $95 billion in 2001, according to a New York-based industry trade group. The amount of mortgage bonds outstanding increased 82 percent over that period."

"Building materials maker USG Corp...signaled it would be hurt by the continued weakness in the housing market. 'During the first quarter, housing construction activity was substantially below the strong levels experienced a year earlier, continuing a trend that began in the middle of 2006,' said CEO William Foote."

"The company said the downturn in new residential construction is likely to continue throughout 2007."

"Consumer confidence in the U.S. declined to the lowest level in eight months in April, sapped by concerns about rising gasoline prices and a wave of mortgage defaults."

"'There was some further deterioration in plans to buy homes and appliances, which suggests the weakness in the housing sector is not going to go away,' said economist Douglas Porter."

"The share of Americans who plan to buy a home in the next six months fell to 2.7 percent, the lowest since November 2004, from 3.2 percent, the survey showed."

"The housing slump is hurting sales at some retailers. Federated Department Stores Inc., owner of Macy's, said March sales increased 2.3 percent, missing analysts' estimates. The miss was 'largely attributable to weakness in home- related merchandise categories,' CEO Terry Lundgren said."

"Myron Ullman, CEO of J.C. Penney Co., said the housing slowdown was affecting the chain's sales of housing-related furnishings. 'We have big-ticket furniture and window covering and those business are softer,' Ullman said."

"The crisis in the U.S. mortgage market has hurt U.S. auto sales this month, General Motors Corp. Vice Chairman Bob Lutz said. 'The market as a whole has been a little weakish. That has come as a result of the housing market problems and the mortgage industry meltdown,' Lutz told Reuters."

"GM in March also said it expects results from finance company GMAC, in which it retains a 49-percent stake, to remain under pressure this year due to increased defaults in subprime mortgages or loans to borrowers with poor credit."

"Spanish real estate and bank stocks tumbled on concern the country's property boom is imploding."

"'This is the burst of the Spanish real-estate bubble,' said Alberto Espelosin, a strategist at Zaragoza, Spain-based Ibercaja Gestion, which manages about $7 billion. 'Banks are exposed and have risk.'"

"'This is a warning sign for the real-estate market in general and for banks that are exposed to the sector, for the risks of increased provisions,' said Emanuele Vizzini, who oversees about $1.2 billion at Investitori Sgr in Milan."

"Between 1998 and the end of 2006, the amount that Spanish banks lent for real-estate activity rose ten-fold to 107 billion euros, according to the bank of Spain."

"'Everyone knows there is a bubble in the Spanish real- estate market,' said Christophe Ochsner, an equity salesman at Venture Finanzas SA in Madrid. 'The decline started with Astroc and it has contaminated the rest of the sector.'"