Not a good sign. They can be tricky. Does it have all its leaves? Mine has kept maybe 25% of its leaves and I've been keeping it warm (75 degrees) under a HID light, and watering just a bit. It's blooming right now. If they lose leaves, I'd think you'd want to keep it very dry. Almost like a plumeria. What temperature are you keeping it at?

I keep the room at about 74 degrees - It has lost leaves but it still has a few and new little one starting - I seem to have problem with my Plumeria also. It has lost 3 large leaves in a three week period - I went and bought a moisture meter cause I think I was over watering.The soil surface was bone dry but at the bottom it was reading high on the moisture scale. I try to keep the humidity in the room around 50%- I was watering the plumeria once a month but it is in a very large pot - it looked to be a 10 inch cutting from last year, my Plumeria bloomed back in the summer my desert rose has never bloomed

Hi Jeff, Gill from the palm forum here. I too have a desert rose seedling and it's caudex has recently begun to go a bit soft. Its only 5-6 inches tall and was grown from seed last spring. I 'up-ended' it and removed the rotted roots and cleaned its bottom! There were white root nubs just sprouting so I re-potted it in even faster draining compost and propped it up with some polystyrene pieces as due to lack of roots it was unstable in the pot. It was watered sparingly to settle it in and I'm keeping it warm and VERY dry in the hope that it will pull through. Some leaves have fell but it is not totally defoliated....yet. It seems no worse. My fingers are well and truly crossed. If not it's back to search on-line for some more seeds. Good luck.
Gill.