DALLAS — The peak spring home-selling season is off to a slow start, builder D.R. Horton Inc. said yesterday, another sign that bad times in the housing market may last longer than expected.

Horton, the nation's largest homebuilder by deliveries, said sales orders in the most recent quarter fell 37 percent, led by even steeper declines in California and the Southwest. The company operates in Hawai'i as D.R. Horton, Schuler Division.

The grim report trumped recent indications that sales of homes, especially existing houses, had been improving.

"It appeared demand had stabilized, but this throws that into question," said Bernard Markstein, an economist for the National Association of Home Builders.

Horton's founder and chairman, Donald R. Horton, said that conditions for selling homes "continue to be challenging in most of our markets," as the supply of unsold new and existing homes remained high.

"We continue to sell more homes than any other builder, even though the spring selling season has not gotten off to its usual strong start," he said.

The Fort Worth-based company said net sales orders for the quarter ended March 31 totaled 9,983 homes, down from 15,771 a year ago. The value of the orders dropped 40 percent, to $2.6 billion from $4.4 billion a year ago.

The decline in orders was sharpest in California, plunging 59 percent to 1,107 from 2,697 a year earlier. Orders in the Southwest fell 39 percent. The smallest decline: 21 percent in the Northeast.

The weak quarter followed a 23 percent drop in orders during the last three months of 2006.

Horton and other builders have been forced to throw in incentives to generate sales. They have also reduced the number of homes under construction, dumped lots and backed out of options for new land.

Shares of Horton were traded down 34 cents, or 1.54 percent, to close at $21.70 yesterday on the New York Stock Exchange. They have traded in a 52-week range of $19.52 to $35.

FORCED TO SELL

Experts said some of the factors that overheated housing markets in the past several years — especially easy financing for buyers with marginal credit and growing use of zero-down loans to afford pricey houses — were coming back to haunt builders.

People who bought homes at low teaser interest rates are now seeing their monthly payments soar. Many of them can't afford the new payments nor can they refinance under today's tougher underwriting standards.

"These people are now putting those homes back on the market. Most of them are nearly new homes, and they're competing with the builders," said Bruce Norris, a longtime real estate investor in Riverside, Calif.

"This is not a solvable problem anytime soon," Norris said. "It's going to run its course," which he predicted won't be over until 2010.

James P. Gaines, a real estate research economist at Texas A&M University, said problems in the subprime mortgage market — loans for borrowers with low credit scores — are likely to reach into other sectors of the housing market.

"There is a domino effect," Gaines said. "Even people who have credit and good income and want to move up, they have to sell the one they're in first."

FINANCING DIFFICULT

Carl Reichardt, an analyst with Wachovia Securities, said March was a disappointing month based on a survey of 150 sales managers at subdivisions around the country. Customers were having a hard time arranging financing and selling their old homes, the managers told Wachovia.

Horton's announcement of falling orders for the quarter — the company is scheduled to provide complete financial results April 19 — is the latest in a string of glum reports from builders.

Last week, Dominion Homes Inc. said it sold 54 percent fewer homes in the first quarter than in the same period of 2006. Last month, Lennar Corp. said its most recent quarterly profits fell 73 percent from a year ago and warned that the rest of 2007 wasn't looking too hot either.

The National Association of Home Builders recently trimmed its construction forecast for 2007, predicting that builders will start work on 1.45 million homes this year, which would break a string of years stronger than the one before.

But that forecast hinges on the belief that the housing market will show signs of improvement this summer and that problems in the subprime mortgage market won't spread.

Markstein, the economist for the trade group, said there is often a tendency to become overly pessimistic after seeing a series of negative reports. He said the current weakness and rich incentives from builders create an opportunity for buyers that might last only three to six months.

"We're always saying this is the best time to buy," he said. "Well, this really is the best time."