Tax expenditures include the inventory of Tax-Exempt Income, Adjustments to Income, Itemized Deductions, and Tax Credits (refundable and nonrefundable).

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Still, Reiner said the big reason for the drop in share price was the increased tax rate and inventory levels.

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Dugas said that market conditions are expected to remain relatively stable for the rest of the year, but high resale inventory, particularly foreclosure inventory, expiration of the tax credit and weak consumer confidence could limit the pace of housing's recovery for several more quarters.

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Pre-tax profits (with inventory and capital consumption adjustments) declined at a 9.2% annual rate in Q2 and are down 7% since last year, the worst since 2001.

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Deliveries rose to 963 units, up 39% from the year-ago quarter, and though the company benefited from a smaller inventory write-down it also took a smaller tax benefit than in 2011.

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"Foreclosure sales, short sales and first-time homebuyers taking advantage of tax credits is purely illusionary and hides the underlying problems of lending and inventory, " says Anthony Sanders, a finance professor at George Mason University's Hall School of Management.

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