Overall, the sector spent most of the morning in positive territory, notching modest gains after falling sharply for each day of the past week. Trading volume was meager as investors got a break from a steady barrage of macroeconomic data that showed the beleaguered industry worsened in the late summer months.

But those gains were temporary, wiped away by the second forecast in as many days predicting a rough road ahead.

On Tuesday, the National Association of Realtors predicted sales of existing homes will fall by 8.6 percent to 5.9 million in 2007, the lowest level since 2002.

Last week, the NAR said pending sales of existing homes fell in July to the lowest level in nearly six years as borrowers struggled to finalize home purchases, particularly in expensive areas.

On Monday, Moody's Investors Services projected that housing would not start to improve until 2009, and that many major homebuilders would have trouble fulfilling the terms of their lending agreements.

Tuesday's share-price losses were moderate and trading volume was low compared with daily averages. None of the major builders was off by more than 1.5 percent.

In early afternoon trading,

-- Lennar Corp. fell 25 cents to $25.62,

-- D.R. Horton Inc. lost 11 cents to $13.58,

-- Pulte Homes Inc. was trading even at $15.05,

-- Hovnanian Enterprises Inc. gained a nickel to $10.02 and

-- Beazer Homes USA Inc. added 2 cents to $9.47.