KB Home reports $255.9M loss, misses forecasts

LOS ANGELES -- The company also booked charges to lower the value of unsold homes, joint venture deals and land option contracts.

Its shares tumbled nearly 6% in morning trading.

The company reported a loss of $255.9 million, or $3.30 per share, for the three months ended May 31. A year ago, it lost $148.7 million, or $1.93 per share.

The latest results included a $176.5 million charge to cut the value of its unsold homes and to abandon some land option contracts.

Revenue plunged to $639.1 million from $1.41 billion in the year-ago period. The decline was driven by lower housing and land sale revenues, the builder said.

Analysts surveyed by Thomson Financial were expecting KB to post a loss of 94 cents per share on revenue of $691.3 million. The earnings estimates typically exclude one-time items.

CEO Jeffrey Mezger said weak demand for new homes and falling home prices forced the company to book additional impairment charges during the quarter, hurting the company's operating results.

"Despite substantially lower home prices, relatively low interest rates and an abundance of choices, potential new home buyers remain reluctant to purchase a home," Mezger said in a statement. "But as housing affordability continues to improve, we expect today

Homebuilders are struggling to sell their homes at a time when many buyers remain reluctant to enter the market because they expect home prices to keep falling. Builders have responded by stepping up incentives and discounts, shrinking their profits.

The average selling price of KB's homes tumbled 17% during the quarter to $226,600.

Lennar, another large homebuilder, said Thursday its losses shrank to $120.9 million, or 76 cents per share. Its revenue fell 61% to $1.13 billion.