Weyerhaeuser Co. said Friday that its third-quarter profit nearly tripled on hefty gains from the sale of its packaging business. But revenues tumbled 37 percent, and the timber and wood company faces a battered housing market.

Chief Executive Dan Fulton said the housing market’s woes were tougher than predicted, although he still believes in the market’s long-term potential.

“Clearly we’ve been dealing with a really tough market situation,” he said in a conference call following the results.

He also said the Federal Way-based company was less optimistic about a recovery in wood product prices than it was even six to eight weeks ago.

Weyerhaeuser, which makes absorbent pulp and wood products and grows trees on about 6 million acres, posted third-quarter net income of $280 million, or $1.33 per share, including $461 million in gains from selling its packaging business. A year earlier, net income totaled $101 million, or 47 cents per share.

But before one-time items, the company posted a loss of $3 million, or 1 cent per share, and sales dropped to $2.62 billion from $4.15 billion. Still, the results beat estimates of analysts polled by Thomson Reuters, who had expected a wider loss of 6 cents per share on revenue of $2.56 billion.

Shares of the company fell 46 cents, or 1.2 percent, to close at $38.22.

Weyerhaeuser expects fourth-quarter earnings in its timberlands business to decline from the third quarter, and losses in its home-building operations are expected to mount on continuing weakness in the housing market.

That market has been shaken by foreclosures, falling home prices and soured mortgage investments. Home builders’ commitment to breaking ground has also plunged.

On top of such broader problems, operating losses in Weyerhaeuser’s wood products business are expected to worsen as prices and volumes decline in the seasonally slower fourth quarter. Profit from sales of pulp, which is used to make tissues, towels and beverage containers, also is expected to fall in the fourth quarter, hurt by lower pulp prices.

“We expect housing market conditions will remain difficult, and our businesses will continue to aggressively manage costs and inventory accordingly,” Fulton said in a statement.

Analysts on the call asked whether Weyerhaeuser might follow rivals such as Plum Creek Timber Co. Inc. and Rayonier Inc. and become a REIT – a real estate investment trust – which could offer the company tax benefits.

Fulton said the company continues to evaluate that option.

In fact, Chief Financial Officer Patricia Bedient said it might be possible for Weyerhaeuser to meet the requirements for becoming a REIT as soon as next year.

Soleil Securities analyst Anna Torma said in a telephone interview that such a conversion appears “likely to be a 2010 consideration rather than a 2009 one. We’ll have to wait and see.”

Torma also said the company’s challenges will extend well into next year.

“Weyerhaeuser is going to face increasingly challenging conditions in the coming quarters due to deteriorating fundamentals in the housing market, which should extend their losses in both the wood products and real estate segments,” she said.

Weyerhaeuser sold its packaging business to International Paper Co. in August for $6 billion.