KB Home saw a 13 per cent increase in the value of its order book amid a stronger than expected quarter in the crucial spring season, raising hopes for a resurgent US housing market.
Chief executive Jeffrey Mezger said the Los Angeles-based homebuilder was “well positioned throughout this spring selling season”, citing the expansion of its community count and strong demand for its homes.
Mr Mezger added that a 17 per cent increase in KB Home’s average community count was its largest increase in four years.
KB Home delivered 2,768 homes during its second quarter that ended May 31, up 2 per cent year-over-year. That easily topped analysts’ forecast for sales to hit 2,468 units, according to Refinitiv. Average selling prices fell 8 per cent to $367,700, falling short of estimates, mainly due to a shift in geographic mix.
Net orders surprised to the upside, rising 15 per cent to 4,064 homes. The value of those orders climbed 13 per cent to $1.53bn.
Shares in KB Home rallied 5.1 per cent to $24.73 in after-hours trading.
Homebuilder stocks have taken a beating this week in reaction to data on Tuesday that signalled persistent weakness in the housing market. Home price growth continued to slow in April, and new-home sales hit a five-month low last month. A commerce department report last week showed that housing starts unexpectedly fell in May, although building permits — a gauge of future construction — ticked up 0.3 per cent month over month.
The figures bucked expectations that the sector would rebound against the backdrop of lower mortgage rates. Homebuilders have faced a shortage of land and rising costs for labour and materials, but they largely sounded an optimistic tone early this year as rates receded.
Lennar, which reported stronger than expected earnings on Tuesday, noted that greater affordability helped bring buyers off the sidelines. However, the builder delivered a third-quarter outlook that fell short of Wall Street forecasts.
KB Home earned net income of $47.5m in the May quarter, or 51 cents a share, down from $57.3m, or 57 cents a share. Revenue was down 7 per cent to $1.02bn.
Analysts were looking for earnings per share of 40 cents on revenue of $936.4m.