Updated from 4:53 p.m. EST

On Thursday, look for the slowing Washington, D.C., housing market to be a major topic of conversation on the earnings calls of Toll Brothers ( TOL) and Hovnanian ( HOV).

The area has been a boomtown for residential real estate over the past few years. But in a research note Wednesday, Raymond James' homebuilder analysts noted that data from the Greater Capital Area Realtors showed that the greater Washington market slumped in November.

"The market appears to be deteriorating at a brisk pace as inventory is up 69% and contracts declined 19% year-over-year during the month," analysts Rick Murray and Paul Puryear wrote. "As we have noted, we suspect `hidden inventory' from speculators may be hitting the market, contributing to the sharp increase seen in recent months."

Data from the Realtor group showed that sales contracts in the District of Columbia fell 18.2% year over year in November and dropped 19.2% in Montgomery County, Md., which is in the northwest suburbs of Washington. Listings, meanwhile, rose 58.1% in D.C. and 74.6% in Montgomery County during the same timeframe.

Last week, Comstock Homebuilding ( CHCI), a small homebuilder that primarily operates in the D.C. area, cut its fourth-quarter guidance and said it plans to expand outside of its core Washington market.

The largest builders, measured by 2004 home closings, in the Washington area, are NVR ( NVR), Hovnanian and Toll.

It will be interesting to see what Hovnanian's management says about the market when it holds its earnings conference call Thursday morning at 11 a.m. EST. In early November, the company announced its orders for the quarter ending Oct. 31, saying it achieved 75% order growth (on a dollar basis) in the greater Washington market.

After the market closed Wednesday, Hovnanian reported a 24% rise in fourth-quarter earnings, beating Wall Street's forecast. The company noted that it is seeing a more normalized level of activity in markets such as California, the Northeast, and Washington, D.C.

In early November, Toll preannounced its orders for the latest quarter, and the results disappointed investors. The luxury-home seller's quarterly order numbers rose just 1% year-over-year on a unit basis. On the November conference call, Toll Brothers CEO Robert Toll said he was seeing a slowdown in sales in many markets, including Washington D.C., Maryland and Northern Virginia. Toll Brothers reports earnings before the market opens Thursday.

On Wednesday, homebuilders slid on a series of negative housing reports. Toll dropped 3.7% to $34.04, Hovnanian fell 3.4% to $48.81 and NVR slid 2.24% to $677.50.

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