Luxury home builder Toll Brothers Inc. (TOL) Tuesday further reduced its forecast for home sales in the current year, as new orders for the first quarter fell 29 percent on slumping demand.

Toll's is often seen as a bellwether for the U.S. housing market. The company's deteriorating forecasts may indicate that the slowing U.S. housing market may be declining faster than previously thought, Raymond James and Associates analyst Rick Murray said.

"Their quarter ends Jan. 31, and a lot of people have been hypothesizing that the weaknesses we saw in October, November and December would perhaps turn around in the beginning of the year," he said. "This would seem to indicate that those trends have not reversed course and perhaps have even accelerated to the downside."

Murray also said Toll's indicator also reflects a tough market in the Washington D.C. corridor, where Toll is a significant player.

Toll also said slowing demand and delays obtaining inspections, certificates of occupancy and utility hookups forced it to cut its outlook to sales of 9,200 and 9,900 homes during the fiscal year, ending on Oct. 31, from a previously lowered view of 9,500 and 10,200 homes.

New orders during the quarter fell to 1,572, from 2,209, while the value of the contracts declined 21 percent to $1.16 billion.

First-quarter revenue, which accounts for homes built and sold and typically reflects orders taken about a year earlier, rose 35 percent from a year ago to $1.33 billion. Analysts on average had forecast total revenue of $1.35 billion, according to Reuters Estimates.

The company ended the quarter with a backlog of 8,635 homes contracted and awaiting construction at a value of $5.95 billion, up 22 percent.

"Demand at our communities, which began to soften in early September, now appears to be improving, although demand pressure from speculators has certainly passed," Chief Executive Robert Toll said in a statement.

Toll Brothers rattled the market in November when it first cut its forecast to a range of 9,500 to 10,200 from 10,200 and 10,600.

Since then, Toll shares, which closed Monday at $31.20 on the New York Stock Exchange, are down 21 percent. In contrast, theDow Jones U.S. Home Construction Index, a wide barometer of home building stock activity, is down 2.8 percent.

Shares were down 3.85 percent at $30 in pre-market trading on the Inet electronic brokerage.

Toll Brothers is due to release first quarter earnings on Feb. 23.