Avatar Holdings, the rare public builder who managed to turn a profit in '07, has succumbed to the flood of red ink staining other builders' balance sheets, reporting a loss for the first quarter of '08 on Thursday, May 8.

The Coral Gables, Fla.-based company lost $556,000, or $0.07 cents per share, in the quarter ended March 31, it reported. That compares with net income of $11.1 million, or $1.08 per share for the first quarter of last year.

Avatar, which conducts most of its business in Florida and some in Arizona, closed on only 65 homes in the first quarter of '08, a 72% decrease from the 230 units it delivered in the first quarter of last year. Dollar volume decreased as well–78% to $17.477 million, compared to $79.602 million during the same period last year.

The company's second-quarter numbers probably won't look much better since the value of its backlog declined by 68%. After subtracting copious contract cancellations, the company had 53 sales contracts in hand at the end of the quarter compared to 142 in the first three months of '07.

"We continue to experience a high level of cancellations of sales contracts for homes," the company stated in its earnings press release. "We do not anticipate a meaningful improvement in our markets in the near term."

To cope with the market crash that is sinking all boats, the company is combing through its sizeable land holdings for commercial and industrial land to sell. Avatar has thousands of long-owned developable acres, which include potential commercial and industrial land as well as residential.

In fact, the sale of some of that land last quarter helped mitigate Avatar's losses, contributing more than $7 million in pre-tax income to the bottom line.

For its size, Avatar continued to maintain a decent level of cash on hand–nearly $159 million compared to $192 million on Dec. 31, 2007.