New home orders up at KB Home

KB HomeKBH said Friday its new home orders in the second quarter spiked 59% over first quarter levels, but its financial results still missed Wall Street's estimates.

KB Home lost $78.4 million, or $1.03 a share, for the three months ended May 31. In the second fiscal quarter last year the company lost $255.9 million, or $3.30 cents a share.

Analysts had expected a smaller loss of 64 cents a share. Their estimates typically exclude one-time items.

Quarterly revenue tumbled 40% to $384.5 million.

Despite the increase in new orders, CEO Jeffrey Mezger remained cautious, saying only that "We are beginning to see signs that some negative housing market trends may be moderating at both the local and national levels."

To compete against heavily discounted foreclosures, KB Home last year rolled out its Open Series houses, which featured smaller and less expensive homes.

The average sales price was $216,200, down 5% from the year before, but up from $210,700 in the first quarter.

While the company's new home orders, which totaled 2,910 in the period, were up from the beginning of the year, they were 31% lower than the second quarter last year.

About one in five homebuyers got cold feet and backed out of the contract, but that was better than the 27% cancellation rate a year ago.

Builders continue to record huge losses and soft sales, but they've been more optimistic in recent weeks as low interest rates, the federal tax credit for first-time homebuyers and bargain prices have helped to fuel sales.

On Wednesday, the government said new home sales slipped 0.6% from April to May, and estimates for February, March and April sales were revised down. However, the number of new homes for sale at the end of May decreased more than 2% from the month before to 292,000.

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