"The pace of cancellations is starting to abate," Toll said. First quarter cancellations totaled 436 (30%) compared to 585 (37%) in the last quarter of 2006. In a thriving economy, the company generally has a 7% cancellation rate.

Toll said his company's backlog is down 30% to $4.15 billion. The number of signed contracts was down 34% to $749 million. "Home-buying activity (still) feels encouraging," the CEO said. The company is considering writing down $60 million for the quarter but that number could be much higher, Toll said.

Orleans' second quarter ended Dec. 31, showing a loss of $7.5 million or a loss of 41 cents a share compared to net income of $15.4 million or 82 cents a share in second quarter 2006. The company now expects annual revenue to be in the $690 million to $725 million range, down from an anticipated $750 million to $780 million for fiscal 2007 which ends June 30. Orleans' cancellation rate for the six months ending Dec. 31, 2006 was about 27% versus 18% in the same 2005 period.