NEW YORK (CNNMoney.com) -- Lennar Corp. Friday became the latest home builder to warn that earnings would fall short of Wall Street's expectations, saying the real estate market "continued to deteriorate" in the latest quarter.

The nation's No. 3 home builder said it now expects to earn $1.25 to $1.35 a share in its fiscal third quarter, which ended Aug. 31. Analysts surveyed by earnings tracker First Call had been forecasting earnings $1.81 a share, down from $2.06 a year earlier.

Lennar also became the fifth major U.S. home builder in little more than a month to cut its financial outlook due to a deteriorating housing market, sending its shares down.

Lennar (Charts) stock fell nearly 2 percent at the open but recovered some ground to stand modestly lower in morning New York Stock Exchange trading.

Lennar lowered its full-year profit forecast on June 26 to $8 to $8.25 per share from $9.25. Analysts, on average, expected $7.58 for the year.

"The U.S. housing market has continued to deteriorate," Lennar CEO Stuart Miller said in a statement.

Miller said new orders appear to have declined 5 percent in the quarter. But higher sales incentives and "certain land adjustments" were the primary factors behind the company's lowered estimate, he said.

The housing market has been slumping since early this year as rising interest rates and home prices crimp sales. Moreover, some speculators who bought homes have begun unloading their investments, adding to the supply of unsold homes.

Miami-based Lennar expects to report third-quarter results Sept. 26.

On Wednesday, home builder Hovnanian Enterprises (Charts) reported a drop in profits, orders and margins, while Thursday KB Home lowered its third-quarter and full-year earnings guidance, citing an increase in cancelled orders for new homes and a "further intensifying" of the unfavorable conditions in the housing market.

The home builders said orders were running as much as 49 percent below last year. All of those companies follow a fiscal year that ends earlier than the calendar year.

It's not just the new home portion of the real estate market that is weakening.

The National Association of Realtors on Thursday slashed its forecast for existing home sales for the year.

It said potential buyers are staying on the sidelines waiting for better deals, and on Tuesday the government reported the sharpest quarter-to-quarter home price pullback in three decades.

The housing market began losing steam at the end of 2005, as skyrocketing prices and a jump in mortgage rates pushed prospective buyers out of the market.

Meanwhile, speculators who bought homes in the once-hot markets of Florida, California, Arizona, Washington, D.C., and Nevada unloaded their investments into the market, further adding to supply.

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