Perhaps the best that could be said of the just concluded first-quarter earnings reporting season among large public home building companies is that it did not cause their stocks to crash.

While the numbers were awful, and several companies said the market lacked enough clarity for them to project earnings going forward, they did not surprise investors, although several of the companies missed estimates by a considerable margin. The builders stocks did take a hit as a result of the earnings news, but overall, they were down less than 5%.

Meanwhile, analysts and company executives alike officially threw in the towel on the spring sales season, with one analyst, Carl Reichardt of Wachoiva Capital Markets, dubbing it the "spring slowing season." Ara Hovnanaian, CEO of Hovnanian Enterprises, which issued a warning of a second-quarter 2007 loss late last week, told The Record of Hackensack N.J. that he does not expect any sort of market turnaround before 2008.

In his monthly "Neighborhood Watch Survey," in which 150 sales managers at home building tracts in 18 markets are surveyed about the state of the market, Wachovia's Reichardt reported that there was a clearly defined trail off in traffic levels and buyer quality in April. His conclusion: "Far from a cyclical or secular rebound or even stabilization, our survey tells us business trends are continuing to deteriorate."

With big builder stocks trading at or below their book values, some are now attracting attention on the investment banking side of Wall Street as potential takeover targets. Morgan Stanley has identified two of the builder stocks that could be attractive targets: Ryland, because the stock is cheap; and Toll Brothers, which, because it is a mid-cap stock, would more neatly fit the acquisition profile of potential acquirers than the bigger companies.

In a May 6 story on The Wall Street Journal Online, a portfolio manager from Dreman Value Management in Boston was quoted as picking Weyerhaeuser as a potential target, because there is perceived value in its forest products division if it were to sell off timberlands.

The biggest concern among analysts now appears to be the positions of the big publics in the debt market, specifically regarding their long-term lines of credit and their revolvers. However, given the success Standard Pacific had in renegotiating its covenants to more favorable terms just prior to releasing its earnings on April 26, much of that concern may have been alleviated.

For now, it appears that builders are succeeding in holding the fort. Stay tuned for the second quarter.