KB Home posts smaller 3Q loss
LOS ANGELES — KB Home posted a smaller third-quarter loss on Friday as new home orders increased and the builder cut costs.
The company lost $66 million, or 87 cents a share, in the three months ended in August. That compares with a loss of $144.7 million, or $1.87 a share, the same period last year.
Still, the results missed analysts’ expectations. Analysts polled by Thomson Reuters forecasted a loss of 58 cents a share on revenue of about $457.9 million.
Investors sent KB Home’s stock down $1.16, or 6.3 percent, to $17.27 in morning trading.
The housing industry is crawling out of the worst downturn in a generation. Nationally, new home sales have risen for five straight months, the Commerce Department said Friday, though the increase in August was a tepid 0.7 percent. Sales are now 30 percent above the bottom in January, but are off about 70 percent from the peak of four years ago.
“The housing market overall remains in a transition,” Jeff Mezger, KB Home’s president and CEO, said in a statement, “where it will likely be some time before we see meaningful improvement in the economic conditions that are essential to our industry’s future growth.”
He noted that increased foreclosures, higher unemployment, tighter credit requirements and weak consumer confidence could hamper a turnaround.
In response, KB Home is building smaller homes to compete with heavily discounted foreclosures, focusing on cost reduction and managing inventory levels.
Revenue dropped 33 percent to $458.5 million from $681.6 million the year before. The company sold 2,240 homes in most recent quarter, a 20 percent decline from the year-ago period, while the average selling price fell 15 percent to $202,800.
Still, the results offered new signs that the housing market, while fragile, is on the mend. KB Home said its new home orders jumped 62 percent in the third quarter from the year before to 2,158, with every region posting year-over-year growth.
Its cancellation rate dropped to 27 percent during the quarter, compared with 51 percent in the previous year.
Low mortgage rates and a federal tax credit of up to $8,000 for first-time homebuyers have helped to fuel recent dealmaking.
On the Net:
KB Home: www.kbhome.com
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