By Ilaina Jonas

NEW YORK (Reuters) - Builder Lennar Corp (LEN.N: Quote, Profile, Research), the No. 2 U.S. home builder, on Tuesday reported its worst-ever quarterly results as the crumbling housing market led to a much wider-than-expected loss, sending its shares to a five-year low.

Lennar, whose sales for the period fell 44 percent, also said it had slashed jobs by about 35 percent and that further cuts would be necessary.

The loss for the third quarter ended on August 31 was $513.9 million, or $3.25 a share, compared with a year-earlier profit of $206.7 million, or $1.30 per share.

Wall Street analysts on average had expected a loss of 55 cents per share, according to Reuters Estimates.

"Our third-quarter results on their face are disappointing. Nevertheless, they're part of a program to reflect the harsh realities of a very difficult market condition," Lennar Chief Executive Stuart Miller said in a conference call with analysts.

The U.S. housing market has been suffering from a steep downturn for nearly two years as high prices and climbing interest rates have deterred prospective buyers. Problems in the credit market, stemming from defaults of mortgages to those with checkered credit histories, have exacerbated conditions as those with good credit ratings have found mortgages more difficult to obtain.

"They're dealing with a lot of excess capacity still," Thomas Leritz, portfolio manager with Argent Capital Management, which does not own home-building shares but follows the stocks.

"In addition to that, you have foreclosures, so there's excess supply coming back into the market from foreclosures as well," he said. "What we're looking for is some sense that there's no additional inventories going into the market."