CNBC.com

I’m not going to say it was a stellar earnings report. It was actually worse than expected, but the losses definitely narrowed.

Fiscal third quarter losses for the nation’s largest public home builder came in at $399 million or $1.26 per share. But compare that to $823.8 million or $2.62 per share for the same quarter a year ago.

That might lead one to say: Hey, maybe the bleeding is ebbing? Well, you have to dig a bit deeper into the numbers. The losses stem mostly from inventory impairments and land write-offs. In English, that means the value of their properties are falling and they’re having to walk away from land that they can’t use because nobody is going to buy the house they would put on it. Those numbers all end up on the books as impairments, and they did come way down in the third quarter, but the reason why doesn’t offer much hope.

“The losses are more a function of the impairments now which are lessening as the companies have less land on their books at this point,” says Credit Suisse analyst Daniel Oppenheim.

The big builder is getting smaller with less inventory, fewer homes to build and fewer customers to whom to sell. Think about it; the big public builders have already written off about 60 percent of their book values.

So yes, the losses are smaller, but only because the companies are now smaller. And they continue to shrink. Oppenheim expects new home permits to continue to fall with a bottom in the market perhaps in 2009. And most expect that the new home industry will bump along the bottom for a while, instead of a quick U-turn back up.

Video: It's been a year since the credit bubble really accelerated the housing slowdown, but with home prices tumbling in most areas, are we really in a buyer's market?

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