With the financial crisis spreading quickly, housing stocks have been facing tough times over the past few months. But on the heels of these worries, shares of one of the nation's largest homebuilders, Lennar Corp. (NYSE: LEN), have been climbing today despite posting a first quarter loss, as its earnings results were not as bad as analysts had forecast.

The company announced it swung to a quarterly loss of $88.2 million, or 56 cents per share, compared with a profit of $68.6 million, or 43 cents per share a year earlier, hurt by lower new home deliveries and orders. Included in the company's earnings figures was a charge of 38 cents per share related to valuation adjustments and write-offs. Excluding that, Lennar's loss would have come at 18 cents per share, exceeding analysts' forecasts for a quarterly loss of $1.07 per share.

The company's quarterly revenue saw a huge fall of 62% to $1.06 billion, down from $2.79 billion a year ago, on pressure from the average selling price which lost 8%. For this period, the slumping housing market came with a drop of 60% for new home deliveries, and with a decline of 57% for new home orders.

The Institute for Supply Management Manufacturing Index for February 2008 fell to 48.3 from 50.7 in January 2008, the institute announced Monday.

Readings above 50 indicate economic growth; readings below 50, economic contraction. Economists surveyed by Bloomberg News had expected the index to drop to 48.1 in February 2008.

The index registered declines in 11 of 18 categories and hit a 5-year low. New orders decreased to 49.1 from 49.5; production dropped to 50.7 from 55.2; prices paid declined to 75.5 from 76; employment fell to 46 from 47.1, and supplier deliveries dropped to 50.1 from 52.8.

"The manufacturing sector failed to grow during the month as the PMI fell below 50%, which indicates weaker performance in February when compared to January," Norbert J. Ore, ISM chairman said, in a statement. "Manufacturers' order backlogs continue to erode as the New Orders Index remained below 50% for the third consecutive month." Ore added that with manufacturing inventories at reasonable levels, the primary concern is rising prices and falling volume.

Economic Analysis: A decidedly bearish data point for the U.S economy. Now below 50, the reading indicates a clear contraction, and a significant deceleration in the GDP growth rate. The U.S. economy is clearly feeling the impact of the housing / residential construction market's slowdown, as it ripples through the economy, lowering demand for furniture, appliances, building materials, and home supplies.