Some housing bubble news from Wall Street and Washington. The AP, "Existing home sales rose at an annual rate of 6.4 million units last quarter, down 6.6 percent from a year ago, the National Association of Realtors said Tuesday. The national median existing single-family home price was $212,300, down 1.8 percent from a year ago when the median price was $216,100."

"State existing home sales in the first quarter generally are below a year ago but more states are improving than reported in the fourth quarter of 2006, and home prices in most areas show that conditions are favoring buyers, according to the latest quarterly survey by the NAR."

"'Essentially, we see that the existing-home market is stabilizing in a broad cyclical trough and moving in the right direction, with a modest gain from the fourth quarter. Conditions changed fairly rapidly during the boom, but we need more patience now to see a slow, gradual recovery, which should start in the second half of this year,' said Lawrence Yun, NAR senior economist."

"NAR President Pat V. Combs said a flattening in home prices is encouraging."

"'It appears the worst of the price correction is behind us,' she said. 'More stable home prices and declining mortgage interest rates are increasing buying power, which should encourage potential buyers who’ve been on the sidelines. Plentiful inventory and motivated sellers in many areas mean there are many opportunities to buy a home, especially if you’re in it for the long haul.'"

"The National Association of Realtors, in partnership with the Center for Responsible Lending and NeighborWorks America, introduced a new brochure today at NAR's 2007 Midyear Legislative Meetings & Trade Expo. 'Learn How to Avoid Foreclosure and Keep Your Home' is the fifth mortgage-related brochure in NAR's consumer education series."

"'Foreclosures threaten the very communities that Realtors work to build,' said NAR President Pat V. Combs. 'Realtors care as much about keeping families in their homes as we do about helping them find the home of their dreams.'"

From Bloomberg. "HSBC Finance Corp., a division of HSBC Holdings Plc, said profit slumped 39 percent in the first quarter. The U.S. mortgage lender flagged loan defaults may rise."

"Net income in the three months to March 31 fell to $541 million from $888 million last year, mainly as HSBC Finance had to almost double the provisions set aside for credit losses to $1.7 billion, the Illinois-based company said in a statement filed to the Securities and Exchange Commission today."

"The ability of HSBC Finance's customers to repay the mortgages could be affected this year as interest rates on the remainder of their loans rise, the company said."

"'Many adjustable rate loans are expected to require a significantly higher monthly payment following their first adjustment' given that interest rates have risen in the past three years, the company said."

"The Home Depot Inc., the world's largest home improvement store chain, cited erratic weather and continued weakness in the housing market as it reported Tuesday a 29.5 percent drop in first-quarter profit."

"'While we expected a tough quarter, this was worse than we expected,' CEO Frank Blake said in a conference call with analysts. He said the housing market continues to be a challenge, and erratic weather conditions across the United States negatively affected the company's spring selling season."

"Blake said Home Depot is not expecting any 'near-term market improvement.'"

The Canadian Press. "Forestry company Tembec Inc says it will shut down its Kirkland Lake, Ont. engineered wood products mill for at least two months to cut inventories because of the slumping U.S. housing sector."

"'Demand for lumber is down sharply, driven primarily by the dramatic decline in the level of housing starts in the United States,' said Dennis Rounsville, president of Tembec's forest products group. 'This decline in demand has resulted in both lower prices for lumber and reduced operating rates in sawmills across Eastern Canada.'"

The Prince George Citizen. "Tolko Industries reacted Monday to continuing poor lumber markets and other cost issues by announcing a series of temporary sawmill shutdowns at its Interior operations."

"'The decline in U.S. housing starts, which has resulted in depressed commodity pricing, coupled with a strengthening Canadian dollar and high transportation costs have forced us to make these difficult decisions,' said Mike Harkies, general manager solid wood and kraft papers for Tolko."

"Lumber prices, driven downward by slumping U.S. housing starts and an oversupply of existing unsold homes, have dropped below the $230 US level, significantly lower than the highs of $400 US reached in 2004 and 2005."

"The price levels, coupled with the impact of a higher Canadian dollar compared to the U.S. currency, haven't been seen since the early '90s, said forest industry analyst Kevin Mason."

"'It is very ugly out there,' said Mason."

The Wall Street Journal. "Fortress Investment Group LLC, the first hedge-fund manager to go public in the U.S., on Tuesday reported a 52% drop in first-quarter net income."

"Fortress bought subprime mortgages from Fremont General Corp. in March. Federal regulators had halted Fremont's home-lending business earlier that month."

From Reuters. "A wide swath of U.S. banks tightened lending standards for nontraditional and sub-prime home mortgages in recent months, while terms for commercial and industrial loans eased amid tough competition, the Federal Reserve said Monday."

"The Fed, in its April survey of senior loan officers, said 45% of domestic banks polled reported a tightening of nontraditional residential mortgage standards. More than half the institutions originating sub-prime mortgages also tightened credit standards."

From CNBC.com. "'I think we have some more pain to endure this year and next,' added Bob Walters, chief economist at Quicken Loans, referring to weak home sales and pricing. 'Industry-wide, about 10% to 15% of individuals who could have gotten a loan four months ago can’t get one today.'"

"'The housing market looked like it was ready to bottom until the problems in the subprime market began to surface,' said Celia Chen, director of housing economics at Moody’s Economy.com. 'Because of the timing, that will prolong the housing correction a little bit more. The risks remain on the downside for housing.'"

"Mortgages in foreclosure rose 62 percent in April and the number of Americans falling behind on home loans will climb this year as home prices fall and lending standards are tightened, RealtyTrac Inc. said."

"There were 147,708 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio. 'We expect foreclosure activity to at least stay above last year's levels for the remainder of 2007,' CEO James Saccacio said."

"In the first quarter, properties valued at $750,000 or more made up about 2.5 percent of all foreclosures, the highest since the first quarter of 2005."

"'It's not just homes that are in poor areas or valued less going into foreclosure,'' said Daren Blomquist, a spokesman for RealtyTrac. 'The problem is widespread.'"

"Houses valued at less than $225,000 accounted for 56 percent of foreclosure filings last quarter, down from an average of about 65 percent during the two years RealtyTrac has collected the data."

"A federal bailout is the wrong way to deal with a wave of foreclosures in the subprime mortgage market, the secretary of the Department of Housing and Urban Development said on Monday."

"'While I am sympathetic to the people who are in these tricky situations, I strongly disagree with the idea that a bailout is the answer,' said Alphonso Jackson, top administrator for U.S. national housing policy."

"'In my mind, companies should not be rewarded for risky investments. The American taxpayer should not foot the bill for risky ventures,' he said."