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Housing Still on Rocky Road

Toll Brothers and New Century offer fresh signs the market hasn't yet stabilized.

Homebuilders and subprime lender stocks came under selling pressure Thursday on fresh signals that the falling U.S. housing market has not yet stabilized.

Toll Brothers

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shares fell 4% after the luxury-home builder provided weak home order numbers and said writedowns related to land holdings will be larger than expected this year.


New Century

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, one of the country's biggest subprime lenders, plunged 27% after the company announced an unexpected fourth-quarter loss and said it expects to write down the value of its residual interests in loans because of a slowing housing market. New Century also said it would restate its 2006 financial results because it didn't reserve enough funds for expected loan losses.

The two reports show that the U.S. housing market is still plagued by a large amount of homes for sale, falling buyer credit profiles and the detrimental effects of declining housing prices.

Toll Brothers reported a 33% order decline by units for its first quarter ended Jan. 31. The figure was worse than the 27% decline expected by Bank of America analyst Daniel Oppenheim, who pointed out that the higher traffic trends at the company haven't translated into buyer purchases.

Toll also said it expects writedowns related to high-cost land purchases in recent years to be higher this year than its prior guidance of $60 million. The charges could exceed $160 million, Toll said.

Oppenheim lowered his 2007 earnings-per-share estimate for Toll to $1.10 from $1.80, to reflect the higher charges and weak orders.

Deutsche Bank analyst Nishu Sood wrote in a note that Toll's results show that "stabilization isn't at hand."

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New Century, meanwhile, cited "the increasing industry trend of early-payment defaults" in cutting its guidance. The subprime lender predicted a fourth-quarter loss, whereas Wall Street analysts were looking for a profit of $1.08 a share.

New Century also projects loan production will be down 20% in 2007.

Toll shares fell 4.1%, or $1.42, in recent trading to $33.01. Fellow builder


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was down 4.8%, or $1.74, to $34.55, and



was off 3.8% to $55.81.

New Century was trading down $8.07 to $22.09. Another major subprime originator,

Accredited Home Lenders

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, was down 1.95, or 6.7%, to $27.05.