Some housing bubble news from Wall Street and Washington. "Existing-home sales fell in August when mortgage availability problems were peaking, according to the National Association of Realtors. Total existing-home sales...are 12.8 percent below the 6.31 million-unit pace in August 2006. Lawrence Yun, NAR senior economist, expected the decline."

"'The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales, with many buyers having to search for other financing when loan commitments fell through,' he said. 'Lower sales contributed to a buildup of unsold inventory.'"

"'The abundant choice of homes is permitting buyers to better negotiate price and terms,' said NAR President Pat V. Combs. 'Price gains in the Northeast and Midwest were largely offset by a decline in the West, while the median existing-home price in the South was down slightly, demonstrating that all real estate is local.'"

"Regionally, existing-home sales in the Northeast 5.7 percent below a year ago Existing-home sales in the South are 12.7 percent lower than August 2006.Existing-home sales in the Midwest are 10.5 percent below a year ago. Existing-home sales in the West are 21.7 percent below August 2006."

The Associated Press. "The fall in sales pushed the inventory of unsold homes to a record 4.58 million in August. That means it would take 10 months to exhaust the inventory of homes on the market at the August sales pace, also a record figure."

"'Once we get through these disruptions, we'll get a better sense of where the actual market is in late fall as conditions begin to normalize,' Yun said."

"However, other private economists are forecasting that sales of both existing and new homes will not stabilize until mid-2008 because they believe it will take that long for prices to fall far enough to reduce the large number of unsold homes."

From Bloomberg. "Home prices in 20 U.S. metropolitan areas fell the most on record in July. Values dropped 3.9 percent in the 12 months through July, steeper than the 3.4 percent decrease in June, according to the S&P/Case-Shiller home-price index."

"The index declined in January for the first time since the group started the measure in 2001, and has receded every month since then."

"'The decline in home prices clearly continued into the summer months,' said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, in a statement."

"The housing slump 'doesn't seem like it will go away any time soon,' said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. 'As far as consumers go, this is another sort of pall over' their ability to borrow against the value of their homes, he said."

From MarketWatch. "Lennar Corp., one the nation's largest home builders, said it posted a loss for its fiscal third quarter as falling prices and mortgage-market turmoil continued to weigh on the housing market."

"'It is already well documented that the housing market has continued to deteriorate throughout our third quarter,' said CEO Stuart Miller in the earnings release. 'Heavy discounting by builders, and now the existing home market as well, has continued to drive pricing downward.'"

"For the quarter ended Aug. 31, Miami-based Lennar said it swung to a loss of $513.9 million. Total revenue fell 44% to $2.34 billion as the company delivered 41% fewer homes and the average selling price decreased 6% from the previous year, driven mainly by higher incentives to attract nervous buyers."

"Lennar said incentives averaged $46,000 per home in the latest quarter, up from $35,900 a year earlier. New orders fell 48% to 5,804 homes."

"The company said it saw a home-building operating loss of $787.7 million, including a large $847.5 million charge related to valuation adjustments and write-offs of option deposits."

The Street.com. "Lennar CEO Miller said the company has responded by continuing to adjust pricing to meet current market conditions in order to keep inventories low. 'The net effect has been a continued deterioration of our net margin and accordingly, higher impairments to our inventory,' he said."

"The company has reduced it workforce to date by approximately 35% and expects continued reductions in the fourth quarter."

"Lennar's aggressive price cutting is on display in Port St. Lucie, Fla., where the company is offering discounts to move townhomes at its Newport Isles development."

"Florida realtor Mike Morgan says Lennar is offering a 2,200-square-foot townhome for a listed price of $215,000. However, he says a Lennar salesperson said an offer of $195,000 might be accepted."

"The value of the Lennar's backlog, or homes under contract and not yet sold, slumped 60 percent to $2.2 billion from a year earlier. Lennar's cancellation rate was 32 percent, up from 29 percent in the second quarter."

"Lennar's charges included $242.5 million in write offs of options on land it doesn't plan to buy, $114.6 million in writedowns on property, and a $138.7 million charge on investments in entities it doesn't include in its operations."

"The company's gross margin on home sales excluding land valuation writedowns was 14 percent, compared with 19.5 percent last year."

"'People are going to be loath to put their hard-earned money down with the prospect of it evaporating in a relatively short period of time through continued falling home prices,' said Robert Stevenson, an analyst at Morgan Stanley."

"Shares of Standard Pacific Corp. sank at the opening bell Tuesday after the homebuilder eliminated its dividend and arranged to borrow $100 million, stirring fears that the company needs the money."

"As a homebuilder, Standard Pacific forms various partnerships to buy land, build homes on it and sell them. In some cases, the partnerships borrow money using the land as collateral, and Standard Pacific is obligated to repay the lender if the land loses too much value."

The International Business Times. "Lenders did little to help subprime borrowers with adjustable-rate mortgages stay in their homes, even as it became clear many homeowners would struggle to keep up with their payments, a study shows."

"Moody's Investors Service said banks eased borrowing terms on just 1 percent of subprime mortgages with interest rates that reset higher in January, April and July."

"It said that 'only recently' have servicers begun to modify more loans to help homeowners avoid foreclosures, 'despite much industry dialogue and heavy press attention' on the problem."

"The credit rating agency said it based its study on 16 servicers that handle $950 billion of subprime mortgages."

"Moody's said that while some servicers actively reach out through phone calls to borrowers who may face resets, a majority still relies on more 'passive' letter-writing."

"'These trends can be a cause for some concern,' said Nicholas Weill, Moody's chief credit officer in structured finance, in a statement. 'The number of future loan modifications by subprime servicers on loans facing reset may be lower than needed to mitigate losses meaningfully.'"

"Moody's did not name the servicers it evaluated, but said its study covered 80 percent of the subprime servicing market. This suggests that many big servicers were included."

"Americans may be disappointed that the Federal Reserve's interest rate cut won't translate into lower monthly mortgage payments and a revival of the housing market."

"'Mortgage rates won't stimulate demand,' said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis. 'The Fed may be a little impotent here because what caused this housing crash was overpriced housing, not mortgages.'"

"Investors concerned about inflation following the Fed's half-point interest rate cut have driven up the yield of 10-year Treasury notes by 23 basis points, or 0.23 of a percentage point, to 4.7 percent. The increase has dashed hopes that lower home-loan costs might entice more Americans to overcome their fear of falling prices and buy homes."

"Total mortgage originations fell 8.8 percent in the second quarter to $730 billion from a year earlier, according to Inside Mortgage Finance. The number of subprime mortgages fell 66 percent to $56 billion, according to the newsletter."

"Mortgage originations may drop to $460 billion in the fourth quarter, down 36 percent from a year earlier, according to the Mortgage Bankers Association."

"Tighter lending guidelines are the biggest challenge facing borrowers, not mortgage rates, said mortgage marketing consultant Scott Tucker. 'To paraphrase Will Rogers, the banks are not concerned about the return on their money, they're concerned about the return of their money,' Tucker said."