Hear that sound? [Cue the crickets.] That's what you hear when this company's operations take an abrupt nosedive as the market for their products gets whittled away to unprofitable levels.

A simple glance at Weyerhaeuser's (NYSE:WY) third-quarter earnings will not suffice, since the sale of its containerboard, packaging, and recycling segments to International Paper (NYSE:IP) helped lift net earnings to a 177% increase over prior-year levels. Excluding all one-time items, though, this 108-year-old company lost money on the quarter ... and things are only looking worse going forward.

Pre-tax earnings contracted across every operating segment, with the wood products and real estate divisions posting enormous losses. Lower sales volumes led the wood products segment to a $146 million loss. Heading into the typically slower fourth quarter, the company expressed no optimism for the near-term outlook, and expects even greater losses for the fourth quarter.

As for real estate, asset impairments of $235 million drove the segment to a $316 million loss for the third quarter. That news alone would be reason enough to steer clear of this company for a while, but management expects home prices to fall still further and anticipates more substantial losses in the fourth quarter.

There are only so many negative words in the English language, and I think most have already been used to describe the state of the housing market. Weyerhaeuser's outlook is weyery bad, but smaller competitor Louisiana-Pacific (NYSE:LPX) posted an even wider loss of $111 million on this election day. Wallboard manufacturer USG (NYSE:USG) faces a possible violation of a lending agreement as the housing slump has crushed earnings and dragged shares to 87% below their 52-week high. Shares of the once-mighty Cemex (NYSE:CX) are down 75%, and Fitch recently downgraded the company's issuer default rating to junk status. Even as I write this, Fitch just announced a downgrade of Weyerhaeuser's rating to just above junk status, citing the likelihood of challenging business conditions into 2010.

The moral of the story is: Run as far away from the homebuilding and related materials sectors as fast as your Foolish feet will take you. Not even a move to REIT status as Rayonier (NYSE:RYN) and Plum Creek Timber (NYSE:PCL) have done would assuage my misgivings about Weyerhaeuser here. This is a fundamental bear market for housing, and the sector must be avoided until the trend reverses.

Further Foolishness:

The Lumber, Wood Production tag in Motley Fool CAPS lists 13 companies. Join the free online community of talented investors today, and help warn fellow Fools about the prevailing weakness in this sector.

Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns no shares in the companies mentioned. The Motley Fool has a disclosure policy.