first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MORE11 theater productions to see in Southern California this week, Dec. 27-Jan. 2The firm also trimmed its earnings estimates for the group, saying margins will probably shrink as competition increases and buyers retreat to the sidelines. The company forecast an average earning dip of 11 percent this year, swelling to 32 percent next year. It also predicts that new-home sales will fall 12 percent this year and 8 percent in 2007. In response to the news, Ryland Group shares lost $2.06, or 4.53 percent to close at $43.44. That’s 47.8 percent off the 52-week high of $83.25. Shares of KB Home, one of the nation’s biggest builders, fell $3.28 percent, or 6.68 percent, to close at 45.82. That’s 46.4 percent off the 52-week high of $85.45. Representatives of the two companies could not be reached for comment. Wall Street gave home builders a cold shoulder on Tuesday, pounding share prices of some major players after a brokerage downgraded its outlook for the entire sector. It was the second consecutive day of share-price erosion with some companies, including Los Angeles-based KB Home and Calabasas-based Ryland Group Inc., dipping to 52-week lows. “It’s slowing more than people anticipated. The soft landing thesis is dead,” A.G. Edwards & Sons Inc. analyst Gregory E. Gieber said Tuesday of the sector. Wachovia Securities weighed in equally as blunt. The company issued a report saying that market conditions are worse that originally thought. “Recent data suggests a substantially more negative demand/supply picture for housing that we expected.” Part of the recasting of the analysts’ outlook is fallout from a press release late last Friday by Irvine-based Standard Pacific Corp. that said new-home orders for the first two months of the 2006 second quarter were down an annual 41 percent, driven in large part by an increase in cancellation rates and continued softening of demand in many of its larger markets. They include Southern California, Northern California, Florida and Arizona. It’s one of the biggest instances of market softening reported by a builder. In response, the company said that it expects to lower its earnings and delivery guidance for the full year when it releases second-quarter financial data at the end of July. Andrew H. Parnes, the company’s executive vice president-finance and chief financial officer, was traveling Tuesday and could not be reached for comment. Edwards’ Gieber said that new-home sales might hold up better than some market watchers think but builders could suffer from the weakening resale market, especially if a new-home purchase depends on buyers selling their current home. “The problem is there is a lot of inventory out there and the inventory is growing as people are canceling contracts late in the construction cycle.” [email protected] (818) 713-3743160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img