It is widely accepted that the housing price fluctuations are contagious and can significantly affect the soundness of financial system .In the Chinese context,one major channel of such spillover comes from real estate developers'd efault risk . Accordingly after several major housing markets cooled down during the 2nd half of 2011,whether such change of market conditions would lead to the systematic risk in the developers'loan sector has become a hot topic in China . In this paper we provide the first quantitative analysis on Chinese listed real estate developers'default risk,focusing on the effects of both housing price changes and developers' inventory volumes . Using the quarterly data between2006Q1 and2012Q1 of81 developers listed in Shanghai and Shenzhen,we firstly re-estimate the value of each developer's inventory by taking the effect of presale into consideration and transferring the book value to market value . This innovative indicator suggests a very high and fast expanding inventory volume in most developers .On average the ratio between inventory value and total asset of the sample firms rose from40% in2006Q1 to68% in2012Q1 . Then we empirically test the sensibility of developers' long-term (with debt-asset ratio as the indicator) and short-term (with acid-test ratio as the indicator) solvencies to housing price changes,and compare the results between developers with different inventory levels . In the long-term,due to the substantial appreciation of developers' inventories during the recent housing price surges,the test suggests that most developers' debt-asset ratios could still remain on a safe level even if housing prices significantly declined .In the extreme scenario in which the housing price dropped by 40%,the debt-assetratio of about 80% of the sample developers would still be below the level of 80%,and firms with higher inventory values are particularly resistant to such housing price drop from the long-term solvency perspective . However,the developers are found to be exposed to high risk in the short-term,especially after the market turning point of 2011Q3 . According to the results of the panel data model,housing price growth rate can significantly and positively affect acid-test ratio,while the inventory volume has a significant and negative effect,which suggests that firms with higher inventory values are especially vulnerable to housing price fluctuations from the short-term perspective . As a most noteworthy fact,the acid-test ratios of some developers with huge inventory volumes would drop to a dangerously low level of less than50% in the scenario with a large housing price drop,which indicates a high default risk for these developers . We suggest both developers and policy makers pay special attention to such potential problem .