Some housing bubble news from Wall Street and Washington. MarketWatch, "Technical Olympic USA Inc. reported a first-quarter loss Thursday. The financial results showed that the Hollywood, Fla.-based company continues to struggle with a difficult housing market and with an investment in a joint venture. 'These are challenging times for homebuilders,' said Antonio Mon, the company's CEO, in the earnings release."

"The company reported a first-quarter loss of $66 million. The latest results included a $78.9 million estimated pre-tax contingency loss related to the potential restructuring of the Transeastern joint venture, as well as $42 million in charges resulting from inventory and land impairments."

"'Currently it is difficult to gauge the timing of a potential housing recovery, as conditions continue to vary greatly. Affordability is improving largely because of lower net pricing driven by extensive use of sales incentives and changes in our product mix,' the CEO said."

"'We are concerned that housing inventories appear to be on the rise again in most of our markets, and sales in March and April were disappointing. This leads us to believe that we have not reached the point of stabilization as we had previously anticipated and that the difficult conditions could persist for the foreseeable future,' said Mon."

"The Company's gross profit margin, excluding impairment and related charges decreased 550 basis points in the first quarter of 2007 to 20.5% from 26.0% in the first quarter of 2006. Home sales gross profit was primarily impacted by higher incentives which increased to $36,400 per delivery for the first quarter of 2007 from $12,000 per delivery for the first quarter of 2006."

"During the three months ended March 31, 2007, the Company abandoned its rights under certain option agreements which resulted in a 7,600 unit decline in its controlled homesites and approximately $150.0 million in cash savings on future land takedowns."

"William Lyon Homes today reported pre-tax income for the three months ended March 31, 2007 of $5,804,000, down 87%, as compared to the comparable period a year ago. Consolidated operating revenue decreased 33% for the three months ended March 31, 2007."

"The Company incurred impairment losses on real estate assets of $3,554,000 for the three months ended March 31, 2007. The impairments were primarily attributable to slower than anticipated home sales and lower than anticipated net revenue due to softening market conditions. Accordingly, the real estate assets were written-down to their estimated fair value."

"During the first quarter of 2007, the average sales price of homes closed (including joint ventures) was $457,700, down 13% from $529,100 for the comparable period a year ago. The lower average sales price reflects a change in product mix and reduced sales prices and an increase in the use of sales incentives due to the slowing of new orders and competitive pressures."

The Detroit Free Press. "Shareholders of Pulte Homes heard a downbeat assessment of the nation’s homebuilding market Wednesday at the firm’s annual meeting. 'The worst may not be behind us,' Richard Dugas, Pulte’s president and CEO, told shareholders in Birmingham."

"Later, speaking to a reporter, Dugas said he saw no signs yet of recovery after the worst housing slump since the early 1980s. 'I think January and February appeared to be on the road to recovery, but after the subprime mortgage issue hit, consumer confidence took another hit, unfortunately, so I’m not sure there’s any light at the end of tunnel right now.'"

"He added, 'I think the problem right now is that consumers don’t believe that housing is a good value today. What we have is a lot of people on the sidelines.'"

The Philly Burbs. "Toll Brothers Inc. executives expect the Horsham-based luxury homebuilding company to turn a profit for the second quarter of 2007, but it will not meet projections for the year."

"The company's prime selling season is drawing to a close, said Chairman Robert Toll, who indicated each month's performance was worse than the previous one this spring. The number of new home contracts slipped 25 percent from last year's second-quarter performance, he added."

"The news did not surprise A.G. Edwards & Sons Inc. analyst Gregory Gieber. 'Anyone who looks to buy one of these houses is already living in a nice house,' he said."

"There are two key reasons why the market has not turned around and they are directly connected, Gieber said. 'You hear a lot about excessive inventory, but the other thing is that the pricing got too damn high,' he said. 'Builders and sellers have to understand that they aren't going to get the prices they're expecting.'"

From Business Week. "The company's second-quarter cancellation rate fell to 19% from the prior quarter's 30%, but this number is still much higher than the 9% cancellation rate in 2006."

"And 'it's not like they're comparing themselves to tough comps anymore,' notes Morningstar analyst Eric Landry. Roughly 70% of second-quarter cancellations came from contracts signed more than 30 months ago, Toll added."

'"The initial take is that things are still ugly, and there's no sign of any turnaround anytime soon,' says Landry, who doesn't expect to see an upturn for homebuilders until 2008 at the earliest. 'There's just too much inventory out there.'"

"For now, homebuilders are still slashing prices to generate more volume, which, Landry says, is the right thing to do. 'Volume is more critical than price at this point,' he explains. 'Many homebuilders have decided that we need to cut prices to get homes sold.'"

"The downturn in the housing market has caught the nation's homebuilders by surprise, leaving many overextended with costly land they can't develop and unfinished homes they can't sell. The financial strain is starting to show. From Arizona to Arkansas, dozens of small- and midsize builders have filed for bankruptcy over the past six months."

"And in late April, credit analysts at Moody's Investors Service warned that a number of large homebuilders could fall out of compliance with their debt agreements later this year, leaving them at risk of default unless lenders come to their rescue by agreeing to rework their loans."

"Some builders are so desperate, in fact, that they're even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms."

From Reuters. "U.S. mortgage finance company Fannie Mae said on Wednesday that it could not present a timely quarterly report due to unresolved accounting problems."

"Fannie said it believes its 'exposure to the Alt-A and subprime mortgage loans... is limited.' The company said it expects about $1.1 trillion in adjustable-rate mortgages 'to reset at least once during 2007, with an additional $400 billion scheduled to reset in 2008.'"

The Orange County Register. "ImpacMortgage Holdings Inc. became the latest local lender to falter amid rising loan delinquencies Wednesday as the company laid off 120 workers in Orange County."

"'It's just in the normal cycle of the business. Volumes are down everywhere. We recognize that and we have to let people go,' said Joseph Tomkinson, Impac's CEO."

"Although Impac's taxable profits and loan volume plunged last year, company officials had insisted the company would weather the downturn because their loans targeted so-called Alt-A borrowers."

"The company's announcement did not bode well for the mortgage industry. But many experts thought the move into the Alt-A tier was inevitable as fewer borrowers could qualify for loans."

"Tomkinson told the Register on March 21 that 'the sky is not falling' for the lending industry, which he said was being stampeded by Wall Street investment bankers."

"At that time, Tomkinson said his company had the funds to cover any loan losses, even though Impac's percentage of late payers doubled last year from 3.1 percent of the company's holdings to 6.2 percent."