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There has been a great deal of discussion among economists about whether or not the housing market has bottomed out. News from the last two days indicates we aren't near a bottom -- and may now be near the bottom for awhile.

New Home Sales Plunge:

Sales of new homes plunged 16.6% in January to a seasonally adjusted annual rate of 937,000, the Commerce Department reported Wednesday.

It was the lowest sales pace in four years and represented the biggest percentage decline in 13 years.

Sales were down 20.1% compared with January 2006.

As if that weren't had enough, prices are decreasing and inventory is increasing. The months of available inventory increased to 6.8 months and prices dropped 2.1% on a year-over year basis.

And there is troubling news on the mortgage front. One of the largest subprime lenders reported:

Countrywide Financial Corp., the biggest U.S. mortgage lender, said payments were late at the end of last year on almost 20 percent of the subprime loans it tracks for other companies and investors who own them.

Delinquencies of at least 30 days on ``nonprime'' loans, those made to borrowers whose credit rating fell short of the highest criteria, widened to 19 percent as of Dec. 31 from 15 percent a year earlier, the Calabasas, California-based lender said in an annual regulatory filing with the U.S. Securities and Exchange Commission. The rate stood at 17 percent at the end of September, according to the company's last quarterly filing.

As is that weren't enough,

The mortgage market has been roiled by a sharp increase in bad loans made to borrowers with weak credit. Now there are signs that the pain is spreading upward.

At issue are mortgages made to people who fall in the gray area between "prime" (borrowers considered the best credit risks) and "subprime" (borrowers considered the greatest credit risks). A record $400 billion of these midlevel loans -- which are known in the industry as "Alt-A" mortgages -- were originated last year, up from $85 billion in 2003, according to Inside Mortgage Finance, a trade publication. Alt-A loans accounted for roughly 16% of mortgage originations last year and subprime loans an additional 24%.

The catch-all Alt-A category includes many of the innovative products that helped fuel the housing boom, such as mortgages that carry little, if any, documentation of income or assets, and so-called option adjustable-rate mortgages, which give borrowers multiple payment choices but can lead to a rising loan balance. Loans taken by investors buying homes they don't plan to occupy themselves can also fall into the Alt-A category.

....

To be sure, defaults have remained very low in the prime market -- and despite the uptick in bad loans, the problems in the Alt-A sector aren't as severe as those that have roiled the subprime market. Some 2.4% of Alt-A loans are at least 60 days past due, according to UBS, which looked at mortgages that were packaged into securities and sold to investors. That is well below the 10.5% delinquency rate for subprime mortgages. (During the housing boom, delinquencies were low for all types of loans because borrowers who wound up in trouble could refinance or sell.)

Note that about 40% of loans written on 2006 were either sub-prime or alt-A. That's a lot of risk in the system. Also note the 4-fold increase in the amount of alternate debt. That's also a big increase in the amount of risk.

What all of this tells us is this could be a very long year in housing.