Beazer View Batters Builders

In a research note, A.G. Edwards analyst Greg Gieber said Beazer faces the risk of posting a loss for fiscal 2007 because of likely land impairment charges that aren't included in the company's current guidance.

"It's not over. It may still be a good ways from being over," wrote Gieber, who rates Beazer a sell.

Shares of Beazer recently were down $2.46, or 5.2%, to $44.55. Meanwhile, KB Home (KBH) was down $1.92, or 3.6%, to $51.89; Toll Brothers (TOL) fell $1.41, or 4.1%, to $32.78; and Hovnanian (HOV) was lower by $1.36, or 4.1%, to $31.75.

Ryland, which reported earnings late Wednesday and gave a relatively optimistic guidance, was down $2.92, or 5.2%, to $53.05.

In the first quarter, Beazer's gross margin sank to 3% in the quarter from 25% a year earlier, because of the land impairment charges and the increased use of incentives to sell homes.

The company's cancellation rate jumped to 43% from 26% in the year-earlier period. Cancellations were down, however, from a rate of 57% in the prior quarter.

Separately, the NAR said existing-home sales fell 0.8% in December to an annual rate of 6.22 million units. The rate was below economists' expectation of 6.3 million units.

Total housing inventory fell 7.9% to 3.51 million homes for sale, which represents a 6.8-month supply of homes at the current sales pace. That was down from the 7.3-month level in November.

The national median price of a home was $222,000 in December, unchanged from a year earlier.

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