Some housing bubble news from Wall Street and Washington. Associated Press, "Sales of new homes fell in June by the largest amount in five months as the housing industry continued to struggle with its worst downturn in 16 years. The Commerce Department reported that sales of new single-family homes dropped by 6.6 percent last month to a seasonally adjusted annual rate of 834,000 units."

"The decline was more than triple what had been expected and was the largest percentage drop since sales fell by 12.7 percent in January. Sales are now 22.3 percent below the level of a year ago."

"The median price of a new home sold last month dropped to $237,900, down by 2.2 percent from a year ago. It was the biggest year-over-year price drop since a 6.5 percent fall in April."

From MarketWatch. "Inventories of unsold homes were unchanged at 537,000. Inventories are down 5% compared with a year earlier, indicating that builders are having only modest success in working off excess homes for sale."

From Dow Jones. "Regionally last month, new-home sales decreased 27.1% in the Northeast, 22.5% in the West, and 17.1% in the Midwest. Demand rose 7.6% in the South."

"An estimated 77,000 homes were actually sold in June, down from 82,000 in May, based on figures not seasonally adjusted."

"D.R. Horton Inc. said it swung to a quarterly loss of $823.8 million. The home builder said its third-quarter results, for the period ended June 30, included pretax charges of $835.8 million for inventory impairments and $16.2 million related to write-offs on land options it's abandoning."

"D.R. Horton has taken over the dubious distinction of absorbing the biggest quarterly land-related write-off so far in this housing downturn, topping Pulte Homes Inc.'s roughly $750 million pretax charge announced last week. Factoring in D.R. Horton's goodwill charge, the quarterly total was nearly $1.3 billion."

"'Excluding the goodwill, the land impairment alone was significantly greater than the $200 million to $400 million we believe most people were expecting,' wrote Morgan Stanley analyst Robert Stevenson in a research note."

"'The question now and for the next few quarters regarding D.R. Horton is whether management is just being conservative and taking the 'big bath' now when the home-builder stocks are getting pummeled anyway, and will realize smaller impairments in future quarters (and possibly benefit from some reversals), or if this is a more bearish signal regarding D.R. Horton's management and operating strategies,' he added."

"The company blamed the loss on the persistent housing slump that has left a glut of unsold homes on the market, forcing sharp price reductions. Looking ahead, Horton did not give any indication about when the market may turn."

"'We believe that market conditions will continue to be challenging, and our quarter-end impairment evaluations incorporated our more cautious outlook for the industry,' Chairman Donald Horton said in a statement."

From Bloomberg. "Pulte Homes Inc., the third-largest U.S. home builder, reported on Wednesday a second-quarter net loss after sales tumbled and the company wrote down the value of land as the housing slump deepened."

"The net loss in the three months ending June 30 was $507.6 million. Revenue slid 40 percent to $2 billion, Bloomfield Hills, Mich.-based Pulte Homes said in a statement."

"Pulte recorded charges, including those for land impairments and write-downs on joint ventures, of $749.4 million before tax. The average sales price for a Pulte home fell 4 percent to about $320,000 in the quarter, the company said on July 17."

"The second quarter also included about $40 million of restructuring expenses as Pulte announced plans to fire 16 percent of its workforce after earlier cutting 25 percent."

From Reuters. "Beazer Homes USA Inc., facing a deteriorating U.S. housing market and federal investigations into lending practices, posted a quarterly loss on Thursday as the builder took charges for inventory and goodwill impairments and abandonment of land option contracts."

"For the third quarter ended June 30, Beazer posted a net loss of $123.0 million. The company said the latest quarter's results included charges of $188.5 million. A substantial portion of the charges relate to the write-down of the value of operations in Northern California, Nevada and Florida."

"Would-be home buyers canceled their orders at the rate of 36 percent, higher than the 29 percent in the prior quarter. New orders for homes fell 30 percent in the quarter to 3,055."

"'Most housing markets across the country continue to be characterized by an oversupply of both new and resale home inventory, reduced levels of consumer demand for new homes and aggressive price competition among home builders,' CEO Ian McCarthy said in a statement."

The Street.com. "Ryland Group...reported steep second-quarter losses, as expected, as land impairment charges and higher selling costs cut into the homebuilders' profits. Ryland posted a loss of $52.4 million. Ryland recorded $147 million of inventory impairment charges tied to land investments."

"The company's revenue fell 38% from last year to $740 million. New orders declined 17%, as the company previously reported."

"M.D.C. Holdings, Inc. today announced a net loss for the quarter ended June 30, 2007 of $106.1 million, which included pre-tax charges of $161.1 million for asset impairments and $6.4 million for write-offs of deposits and pre-acquisition costs associated with land option contracts the Company does not intend to pursue."

"Net loss for the six months ended June 30, 2007 was $200.5 million, which included pre-tax charges of $302.5 million for asset impairments and $10.5 million for write-offs of deposits and pre-acquisition costs associated with land option contracts the Company does not intend to pursue."

"'Overall, the market for new homes stinks ... liquidity is getting sucked out of the system,' said Alex Vallecillo, senior portfolio analyst with Allegiant Asset Management, which has $30 billion in total assets under management. 'Mortgages are going to be tougher to come by, more expensive. The buyers are basically drying up.'"

"With sales plunging, home builders are now writing down the value of their unsold homes and the land they have bought for future development. The lower value is reflected in each builder's tangible book value, what a company could get if forced to hold a fire sale."

"'The market believes these guys are going to be writing down their book values in the next quarter or two -- or more,' Vallecillo said."

From CNBC. "'Moody's predicts that from it's peak in 2005, the national median home price will fall about 9% before stabilizing next summer,' said Steve Liesman, CNBC's senior economic correspondent. 'That means the price has further to drop than it already has.'"

"According to Liesman, Moody's Mark Zandi sees a 'stunning erosion in credit quality.'"

From Realty Check. "The builders will tell you they’ve weathered downturns before, and they will certainly weather this one. But what’s troubling is that there’s this strange tone among so many of the analysts that I talk to: this feeling that this downturn is unlike any other because of the credit factor."

"Most housing corrections are based on fundamental broader economic issues, like a nationwide recession or massive job losses. We don’t have that now. It’s all about fear and credit. And until both of those settle, housing won’t either."

The Washington Post. "The head of Freddie Mac has a bearish outlook for the housing market. 'I think on a national level the whole housing market has another year and a half of tough times ahead of it,' Richard F. Syron, CEO said in an interview Wednesday."

"'I think it will get materially more severe,' he said. 'I think we'll probably see in real terms . . . housing prices will go down.'"

The Record. "Demand for new housing is still declining and won't start to rebound until 2008, the chief economist of the National Association of Home Builders said Wednesday."

"'The big question is: Is this ball still rolling downhill? I think it is,' said the economist, David Seiders, in his midyear forecast for the home-construction industry. 'We're dealing with some major problems out there.'"

"Seiders said the housing market began sliding in 2005, in reaction to the boom that dramatically inflated prices in the first half of this decade. 'That destroyed affordability,' he said."

"And 'unanticipated and sudden turmoil' in the sub-prime mortgage market this year has further weakened the outlook for the rest of this year and 2008, Seiders said."

"Seiders forecast that the new-house market won't return to normal levels until 2010 or 2011. 'We're looking for a fairly slow climb out of this hole,' he said."

"Absolute Capital Group Ltd., an Australian hedge fund that invests in collateralized debt obligations, suspended withdrawals from two of its funds after forecasting losses amid a rout in U.S. subprime mortgages."

"Basis Capital's investments included the unrated portions of CDOs, the first in line for losses when borrowers fall behind on mortgage payments. 'There's probably more pain to come,' said Michael Birch, who helps manage $133 million at a Sydney-based hedge fund."

"The risk of owning bonds of Wall Street firms surged as concerns escalated that investment banks will be hurt by rising losses from subprime mortgages and a freeze in demand for corporate debt."

"Credit-default swaps on $10 million of Goldman Sachs Group Inc. bonds jumped as much as $18,000 to a record $85,000, according to broker Phoenix Partners Group. Bear Stearns Cos. credit swaps surged as much as $29,000 to $110,000, also a new high. Lehman Brothers Holdings Inc. climbed as much as $24,000 to $104,000."

From Business Week. "First, it was the second half of 2007. Then it was 2008. Now analysts are saying the national housing market may not rebound until 2009."

"Despite the ugly national picture, Realtors are forging ahead, turning the focus to local real estate markets and buying opportunities—and blaming the media for the continued decline in home sales."

"'The numbers are the numbers,' says Tom Kunz, CEO of Century21 Real Estate, a division of privately held Realogy. 'People are going to come home tonight, have dinner, turn on the TV, and see that home sales declined. They're going to look at that and say 'Hell, I'll sit on the fence.'"