D.R. Horton Inc. (DHI) said its fiscal first-quarter loss narrowed on fewer write-downs, but revenue crumbled and closings plummeted nearly 40% as buyers remain paralyzed on the sidelines.

On the positive side, the nation's largest builder by closings has a cash cushion that should allow it to survive the prolonged residential downturn that has been extended by the financial crisis.

That helped shares jump over 14% in early trading, making it the sector's biggest gainer. Centex Corp. (CTX) followed with a gain of 6%.

For the quarter ended Dec. 31, Texas-based D.R. Horton reported a loss of $62.6 million, or 20 cents a share, compared with a loss of $128.8 million, or 41 cents a share a year earlier.

Revenue fell 47% to $900.3 million.

"Market conditions in the homebuilding industry continued to deteriorate during our first fiscal quarter, characterized by rising foreclosures, high inventory levels of both new and existing homes, increasing unemployment, tight credit for homebuyers and eroding consumer confidence," Chairman Donald R. Horton said. "We continue to adjust our business to the current homebuilding environment by reducing our homes under construction and our owned lot position, controlling costs and repaying debt."

That helped fuel $56.2 million in pre-tax charges, compared with $245.5 million the prior year, adding to the industry's total now approaching $30 billion. Because of market's accelerated deterioration, two analysts expected D.R. Horton to take more.

Credit Suisse, which had estimated $220 million in impairments for the first quarter, expects $825 million of charges in future quarters.

JPMorgan estimated $240 million in land-related charges for the first quarter.

D.R. Horton's closings fell 38% to 4,068 homes. At Dec. 31, the company's sales backlog of homes under contract was 4,006 valued at $900 million, down from 8,138 and $2 billion. Net sales orders fell 35% to 2,777 homes and the cancellation rate dropped to 38% from 44%.

The company's results appeared to appease industry watchers fearful for the sector's 2009 cash flow.

Home-building cash balance at Dec. 31 was $1.9 billion, including receipt of a federal income tax refund of $621.7 million in December. Net cash provided by operating activities for the first quarter was $817.6 million. The company even managed to eke out a quarterly cash dividend of 3.75 cents a share payable on Feb. 26.

"We have generated positive cash flow from operations in each of the past 10 quarters, and we will continue to focus on maintaining our strong liquidity position and balance sheet," Horton said. "We plan to generate positive operating cash flow in fiscal 2009, in addition to the cash provided by any federal income tax refunds."

Last week, NVR Inc. (NVR), which has long outshone its peers by shunning land ownership, said it swung to a quarterly loss, showing even the strongest companies can't escape the downturn. Meritage Homes Corp. (MTH) and Ryland Group Inc. (RYL) on Wednesday reported their quarterly losses narrowed, but the sales slump hasn't shown signs of abating.

-By Dawn Wotapka, Dow Jones Newswires; 201-938-5248; dawn.wotapka@dowjones.com

(Kevin Kingsbury and John Kell contributed to this article.)

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