Yesterday Beazer Homes (NYSE: BZH) published results for the quarter ended September 30th.  The stock temporarily rallied based on Wall Street’s relief that the results of an accounting re-statement weren’t worse. 

Momentarily ignored was the company’s ghastly performance resulting from the recent credit crunch.  The cancellation rate reached 68% either because buyers got cold feet or their financing fell through.  That means the company is largely building ‘on spec’ in the teeth of a fierce housing downturn.

Beazer’s stock price was in the mid-40s at the beginning of the year and is trading at a bit over 9 today.  It’s hard to imagine a stock that better qualifies for the old Wall Street warning about trying to catch a falling knife.  Just because this one traded above $40 bucks a few months ago, there’s no reason it can’t go down $3, $2 or zero.

 In a multi-year housing downturn, there will be builders that survive and there will be those that don’t.