Toll Brothers just couldn’t keep the bad news to itself. The company said in a preliminary report Wednesday that its home building sales fell 34.0% in the fiscal third quarter, amid a prolonged housing slump. It also expects $100.0 million to $200.0 million in write-downs during the quarter, related to operating communities, land options and joint ventures.

The company’s home building sales for the three months ending July 31, its third quarter, fell to $796.5 million from $1.21 billion last year. Analysts polled by Thomson Reuters expected, on average, third-quarter sales of $746.2 million.

Yet-to-be-fulfilled orders fell 52.0% to $1.8 billion from $3.7 billion a year ago. Net contracts, or gross contracts minus cancellations, fell 35.0% to $469.7 million from $727.0 million a year ago. Toll Brothers (nyse: TOL – news – people ) said it was not comfortable providing guidance, “given the state of the market.”

Toll Brothers was slightly optimistic concerning the “Home Builder Relief Act of 2008″. The company thinks the act might help restore confidence in the housing market. Right now, very little confidence exists.

All in all it was a very tough quarter for TOL.

The continued decline in home prices is driving down consumer confidence as well.

The Conference Board’s consumer confidence index plunged to 50.4 this month, hurt by inflation, sinking home values and soaring gas prices. It was the lowest reading since February 1992 and half what it was a year ago.

The index dropped more steeply than expected from 58.1 in May. Economists surveyed by Thomson/IFR had expected the report, released Tuesday, to show a more modest decline to 56.5 for June.

Inflation, political flux and job insecurity have created an ”uncertainty more acute, perhaps, than any time since 9/11,” said William Hummer, chief economist at Wayne Hummer Investments in Chicago.

U.S. home prices tumbled in April at the fastest rate since a widely followed index was begun in 2000. All 20 metro areas surveyed posted annual declines for the first time.

People are nervous, and value is disintegrating as their confidence wanes.

Reports are in that home prices have went down over 15% in a year in 20 major metropolitan areas.

Not surprisingly, Las Vegas, Miami and Phoenix saw the largest declines of home valuations. These cities are reporting a 25% loss in home values, which is pretty huge. Undoubtedly, they are the same areas that flourished with development and new builds from 2003 – 2005.

Analysts are saying that this trend could continue with foreclosures on the rise and no market to absorb the empty homes.

Many homeowners owe more on their homes than they’re worth after using it as a virtual ATM during the high flying days of first, second and third mortgages. Many owners are unable to leave or sell their homes without taking a loss.

David Blitzer, chairman of the index committee at Standard & Poor’s said:

“There might be some regional pockets of improvement, but on an annual basis the overall numbers continue to decline.”

Falling real estate values affect us all, because when homes are left vacant neighborhoods decline. Lawns that were once tended are left to become weed gardens and pesky people like metal thieves steal the copper and anything of value from the interior of these homes, which could cause serious damage with leaked natural gas etc. Squatters are another risk to these areas.

What are your thoughts on declining home values? Have you been directly affected by this?

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