Bensalem, Pa.-based Orleans Homebuilders (AMEX: OHB - News) early Friday morning reported a loss of $38.6 million ($2.09 per diluted share), including impairments and other charges of $36.6 million, for its fiscal second quarter.

Revenues from home building were down 6% to $144.5 million, on the sale of 323 homes, compared to $153.2 million on sales of 377 homes in the same period of 2006. The average selling price for homes delivered in the second quarter was $447,000 compared to $406,000 in second quarter of 2006.

New order revenues fell 25% to $114.7 million (284 homes) compared to $152.4 million (367 homes) for second quarter, 2006. The cancellation rate rose to 26% from 24% a year earlier.

The company cut its inventory of spec homes by 46% (234 homes) to 275 as of the beginning of the quarter. Backlog value at yearend was up 4% to $301.3 million, comprising 610 homes, compared to $289.9 million, or 591 homes, at December 31, 2006, with 88% of the backlog in the northern and southern regions, compared with 80% in those regions a year earlier. The average selling price for backlog homes at yearend was $494,000 compared to $490,000 as of December 31, 2006.

Orleans sold approximately 1,400 lots in five states prior to the end of the tax year on Dec. 31, including primarily of raw land and partially and fully developed lots, except in its Arizona market, where all of the Company's work-in-process assets were sold. The company said approximately 94% of the lots disposed of were in Florida, Illinois and Arizona. It also said it has option agreements to buy back approximately 350 lots in two communities in different states, for a net decrease in its owned and controlled lot count of approximately 1,050 lots.

The land sales generated aggregate cash proceeds of approximately $32.9 million, and Orleans expects $25 million in federal income tax refunds before the end of the fiscal year at the end of June.

Orleans said it cut its count of owned and controlled lots by 35% from the end of second quarter, 2006 to approximately 8,500, including approximately 2,550 controlled though contracts and options. Among its owned lots, at yearend, approximately 88% were in its northern and southern regions, 7% were in its midwestern region and 5% were in Florida.

In its earnings release, the company said, "The unfavorable market conditions in the housing industry have continued to negatively impact the Company's closings, new order activity, absorption and pricing." It continued, "The company is responding to these unfavorable market conditions by attempting to maintain absorption levels through the use of sales incentives; reevaluating its individual land holdings; reducing its land expenditures; and emphasizing cost reductions to adjust for lower levels of production. Further decreases in demand for our homes may require the company to further increase the use of sales incentives. The company also continues to evaluate its owned and controlled lot positions and other assets."

Orleans stock (AMEX:OHB) was trading up 13% at $5.64 by mid-morning.