Horton posted a fourth-quarter loss of $799.9 million, or $2.53 per share, compared with a loss of $50.1 million, or 16 cents per share, a year ago. Home sales revenue for the fourth quarter fell by 50 percent to $1.5 billion.

Like other builders, Horton has been floundering amid a nationwide housing slump rooted in the rampant risky mortgage practices that fueled the boom years of 2002 to 2006.

The resulting wave of foreclosed homes created an excess of supply, drove down prices and devalued builders' inventory of land, forcing them to take impairment charges on lots, many purchased at peak prices during the boom years.

Then more recently, the housing slump combined with the implosion of the financial sector, the decline in the stock market and other broader economic phenomena to weaken consumer confidence and erode demand for new homes still further.

In its fourth quarter, Horton recorded pretax impairment charges totaling $988.9 million and write-offs of $85.7 million related to land option contracts the company does not intend to pursue.

Horton's charges reveal that Horton likely received about 25 cents on the dollar for its land sales during the quarter, wrote J.P. Morgan analyst Michael Rehaut in a note to clients.

Such a valuation combined with the likelihood of continued home price declines should result in continued similar charges for the builders, Rehaut concluded.

In November, the primary measure of homebuilder sentiment slumped five points to 9, the lowest since the measure was started in January 1985, according to the National Association of Home Builders.

"Market conditions in the homebuilding industry deteriorated during our fourth fiscal quarter and October, characterized by rising foreclosures, high inventory levels of both new and existing homes, increasing unemployment and eroding consumer confidence," Donald Horton, the chairman of the board, said in a statement.

The increasing severity of the economic crisis has taken a toll on homebuilder shares although they received a boost starting on Monday after the government announced further aid for the financial sector.

Since October 1, builder shares are off about 50 percent as measured by the Dow Jones U.S. Home Builder Index <.DJUSHB>, compared with 27 percent for the S&P 500 <.SPX>.

Horton's shares were up 15 percent at $5.76 in early trading on the New York Stock Exchange.

(Reporting by Helen Chernikoff; Editing by Steve Orlofsky, Dave Zimmerman)