UPDATE 1-Moody's cuts D.R. Horton, Ryland ratings to junk

(Adds action on Ryland Group)

NEW YORK, Dec 19 (Reuters) - Moody's Investors Service on Wednesday cut its rating for home builders D.R. Horton Inc (DHI.N) and Ryland Group Inc (RYL.N) to junk status, citing persistent troubles in the U.S. housing market.

"Moody's does not see a sector recovery beginning before well into 2009 at the earliest, with any housing recovery likely to be very measured for some time thereafter," the bond-ratings firm said in a news release.

Moody's cut the senior unsecured debt of D.R. Horton and Ryland one notch to "Ba1," one step below investment grade, from "Baa3." The outlook for both builders is negative, indicating an additional cut may be likely over the next 12 to 18 months.

Moody's said it "does not expect Horton to be able to return to bottom-line profitability within the next year."

Meanwhile, "Ryland's bottom line profits will remain under heavy pressure in 2008, given Moody's expectation that land impairments and option abandonments will continue at a brisk pace," the rating agency said. (Reporting by Neil Shah and Karen Brettell; Editing by Leslie Adler)