Lennar Corp reported a deeper-than-expected quarterly loss as the No. 3 U.S. homebuilder wrote down the value of land and generated less revenue than Wall Street had forecast, sending its shares down more than 6 percent.

The company said on Monday that its new order rate had fallen 8 percent in the third quarter ended on Aug. 31, the smallest decline since 2006, and forecast a return to profitability by 2010.

During the third quarter, the overall housing market continued its road back to recovery as more confident home buyers took advantage of increased affordability, said Stuart Miller, chief executive of the Miami-based company. Consumer sentiment has significantly improved.

Lennar's net loss widened to $171.6 million, or 97 cents per share, in the quarter from $89 million, or 56 cents per share, a year earlier.

The company said its loss included charges of 42 cents per share from valuation adjustments and other write-offs and 34 cents from tax-related matters.

Analysts were expecting a net loss of 51 cents per share, according to Reuters Estimates. Stock analysts differed as to the magnitude of the miss.

Revenue dropped to $720.7 million from $1.1 billion as deliveries of homes tumbled 29 percent to 2,691 homes. Wall Street had looked for $760.5 million in revenue.

Analysts said they expected the magnitude of write-offs to decline in the coming quarters as demand improves.

Improving order trends and higher margins would point toward a slowing of these charges, Credit Suisse analyst Daniel Oppenheim wrote in a note to clients.

The sector has been gaining steam in recent weeks, following several brokerage upgrades, as Wall Street becomes increasingly confident that the worst of the housing slump has passed. The Standard & Poor's homebuilder index .GSPHOME has gained 50 percent so far this year.

As evidence of the recovery, Lennar's cancellation rate fell to 19 percent in the quarter from 27 percent a year earlier, and the value of its backlog rose 19 percent from the previous quarter to $647 million.

In order to capitalize on the improvement in our sales pace, we increased our home starts during the quarter, which will lead to higher deliveries in the fourth quarter, Miller added.

Lennar trails Pulte Homes Inc, which became the nation's largest homebuilder following its August acquisition of Centex, and D.R. Horton Inc.

Shares of Lennar, which had run up about 90 percent over the past year, were down $1.04, or 6.3 percent, at $15.50 in early trading.

They had soared from a low of $3.42 in November to a 16-month high of $17.66 last Thursday.

Investors will get another look at the sector on Friday, when KB Home reports its results. (Reporting by Scott Malone in Boston and Christopher Kaufman in New York; Editing by Lisa Von Ahn and Gerald E. McCormick)