KB Home Misses Estimates; Stock Down 6%; Housing Recovery Slow
Posted on | September 25, 2009 | No Comments
KB Home missed Wall Street estimates which sent the stock down 6%. This miss of analysts estimates reiterates that the housing recover is going to be very slow. The company lost 87 cents a share or $66 million. This is much smaller than the loss of the third quarter last year which was $144 million or $1.87 cents a share. Analysts were expecting a loss of 58 cents a share which is the recent the stock is down over 6%.
New home sales have risen for five straight months but the month of August only saw an increase of 0.7%. Sales are up 30% from the bottom in January but are still down 70% from the housing market top of July 2006. “The housing market overall remains in a transition,” Jeff Mezger, KB Home’s CEO, stated, ”where it will likely be some time before we see meaningful improvement in the economic conditions that are essential to our industry’s future growth.”
KB Homes is building much smaller homes to compete with the discounted foreclosures on the market. With this new strategy, KB Home said its new home orders were up 62% in the third quarter when compared to a year ago. Every single region has posted year over year growth. The current low mortgage rates and the $8000 first time home buyers tax credit have helped KB Home to increase home sales even though it is still at a very slow pace.
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Author: Mike Garner
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