by Calculated Risk on 7/10/2007 12:18:00 PM

"Market conditions for new home sales declined in our June quarter as inventory levels of both new and existing homes remained high, and we expect the housing environment to remain challenging. We adjusted our sales prices as selling conditions deteriorated, and we continue to react quickly to market dynamics. We expect to report a profit from operations before impairments for the June 30, 2007 quarter. However, as a result of the factors mentioned above, we will realize significant asset impairments which will result in a loss for both the quarter and the nine months ended June 30, 2007."
Donald R. Horton, Chairman, D.R. Horton

Press Release: D.R. Horton, Inc. ... Reports Net Sales Orders for the Third Quarter of Fiscal Year 2007

D.R. Horton, Inc. ... the largest homebuilder in the United States, ... reported net sales orders for the third quarter ended June 30, 2007 of 8,559 homes ($2.0 billion), compared to 14,316 homes ($3.8 billion) for the same quarter of fiscal year 2006. Net sales orders for the first nine months of fiscal year 2007 totaled 27,313 homes ($6.9 billion), compared to 41,550 homes ($11.4 billion) for the same period of fiscal year 2006. The Company's cancellation rate (sales orders cancelled divided by gross sales orders) for the third quarter of fiscal 2007 was 38%.

Remember when improving cancellations rates were the sign that housing had bottomed? Well, cancellations rates are rising again. The builders are taking "significant asset impairments" and reporting losses. And prices are being adjusted down as "conditions deteriorate".

There is no question that the housing market has taken another down turn. I expect this bad news from the builders to show up soon in the new home sales and housing starts reports.