KB Home (NYSE: KBH) reported lower-than-expected fiscal second-quarter loss on Thursday as the homebuilder benefitted from strong growth in home deliveries and higher average selling price amid gradually improving U.S. housing market.
Both adjusted loss and revenue exceeded analysts’ consensus estimate. Shares climbed about 3% in early trade.
KB Home’s better-than-expected performance follow some strong quarterly results from other prominent homebuilders such as Toll Brothers Inc. (NYSE: TOL) and Lennar Corporation (NYSE: LEN)
“We remain confident that we are on course to achieve a solidly profitable 2013, with meaningful profits expected in each of the final two quarters of the year, and will continue to build positive momentum entering 2014,” said K B Home’s President and Chief Executive, Jeffrey Mezger to analysts during earnings call.
The demand for new homes have been rising in the recent past as lower interest rates, rising rents and gradually rebounding macroeconomic environment, especially the labor market, is encouraging Americans to buy homes.
In addition, the demand and supply mismatch have pushed up home prices, which in turn is boosting homebuilders’ earnings.
Just last Tuesday, the Commerce Department’s housing report showed that new home sales rose at its fastest pace in last five years in May even as home prices soared.
For the fiscal second quarter ended May 31, KB Home reported a loss of $3 million or 4 cents a share compared to a loss of $24.1 million or 31 cents a share, in the same quarter of last year.
Excluding onetime item, ($15.9 million charge related to repairs), adjusted earnings stood at $12.9 million.
Analysts polled by FactSet expected a loss of 6 cents a share.
Revenue leaped 73% to $524.4 million from $302.9 million and exceeding Wall Street’s estimate of $454 million.
The Los Angeles, California-based Company said that home deliveries rose 39% to 1,797 units. Average selling prices soared 255 to $290,400.
Orders backlog, a key gauge on homebuilder’s future business, jumped 19% to $826.6 million.
The stock was up 24% before the market open.
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