KB Home New Home Orders up From 1Q

In this photo taken June 24, 2009, a KB Home sign stands in front of a sales office at a new KB Home...

In this photo taken June 24, 2009, a KB Home sign stands in front of a sales office at a new KB Home development in Sylmar section of Los Angeles, Wednesday, June 24, 2009. KB Home is reporting Friday, June 26, a smaller loss for its second quarter than a year ago but the earnings results still missed Wall Street's estimates. (AP Photo/Jae C. Hong)

(AP)

Going into its second quarter, KB Home had everyone wondering whether the homebuilder could duplicate the standout performance of its first quarter — posting a 26 percent year-over-year increase in new orders for the first time in more than three years.

The builder didn't even come close. On Friday, KB said new orders in the second quarter were 31 percent below the second quarter last year. The comparison to the first quarter fared far better, however, increasing by 59 percent.

Still, Wall Street appeared less than impressed, and the builder's shares tumbled $1.35, or 9.1 percent, to close at $13.42 in trading Friday.

During a conference call with Wall Street analysts, CEO Jeffrey Mezger said the company knew outpacing the prior-year pace for new home orders was going to be tough, but projected it would be able to do so the rest of this year — assuming the economy doesn't get worse.

"Our results through the first half of 2009 are pointing toward a strong fourth quarter and we anticipate this momentum will carry in to the first quarter of 2010 and beyond," Mezger said.

Los Angeles-based KB Home sells built-to-order homes in 13 states. It was ranked the fourth-largest homebuilder last year by Builder magazine.

The builder said Friday it 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 percent to $384.5 million.

Looking at the broader housing market, Mezger said he doesn't expect a housing market rebound any time soon.

"We do not expect a sustained rebound in the overall U.S. housing market in the near term," Mezger said, citing the possibility that unemployment and foreclosures will continue to climb, undermining housing prices and consumer confidence.