Lennar Corp , the No. 3 U.S. homebuilder, reported a larger quarterly loss on Monday, as it wrote down the value of land and other assets to deal with the recession, but it pointed out signs of real estate market recovery.

Lennar said its net loss widened to $171.6 million, or 97 cents per share, in the third quarter ended August 31 from $89 million, or 56 cents per share, a year earlier.

Analysts were expecting a net loss of 51 cents per share, according to Reuters Estimates.

Revenue dropped to $720.7 million from $1.1 billion as deliveries of homes tumbled 29 percent to 2,691 homes.

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

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.

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

New orders in the third quarter slipped 8 percent from the same period a year ago, the smallest percentage year-to-year decline since November 2006, Lennar said.

Our new orders increased sequentially each month during the quarter and we ended the quarter with our highest backlog since August 2008, Chief Executive Officer Stuart Miller said in a statement.

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, he added.

Lennar trails Pulte Homes Inc

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

Its stock has soared from a low of $3.42 in November last year to a year-high of $17.66 last Thursday.

(Reporting by Christopher Kaufman, with additional reporting by Scott Malone; Editing by Lisa Von Ahn and Gerald E. McCormick)