The bottom hasn’t hit yet for one of the nation’s largest home builders, D.R. Horton, which said Tuesday that third-quarter sales orders fell 40 percent due to high inventory levels and weak market conditions weighing on new homes.

D.R. Horton reported 8,559 home sales orders for the quarter, which equates to about $2 billion, down from 14,316 homes, or $3.8 billion, in the same period a year ago.

Net sales orders for the first nine months of fiscal 2007 totaled 27,313 homes ($6.9 billion), compared with 41,550 homes ($11.4 billion) for the same period of fiscal 2006.

Meanwhile, the company’s cancellation rate for the third quarter was 38 percent.

Donald R. Horton, chairman of the board, in a statement said that the company expects the housing market 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,” he said.

The company will release its third-quarter results on July 26, before the market opens.

D.R. Horton shares (NYSE: DHI) were trading at $19.36 this morning, down slightly from Monday’s closing price of $19.79.

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