KB Home Records Decline in Orders; Cancellations Rise

KB Home said the number of canceled home orders rose in December and January while net orders for new homes fell -- a trend that, if it continues, could force the company to adjust revenue projections.

The Los Angeles company pointed out the shift in a filing with the Securities and Exchange Commission on Friday.

KB Home began fiscal year 2006 with a seven-month backlog of new-home orders with a projected revenue value of $6.76 billion, according to the filing.

“Based on our backlog, we expect revenue growth for the first half of fiscal year 2006 to be consistent with the growth rates we have experienced over the last several years,” the company said.

Last year, KB Home generated sales of $9.44 billion, a 34% increase over 2004.

But a U.S. Census Bureau report indicated that single-family housing starts in December were about 12% lower than in the previous month and about 8% less than a year earlier. The median sale price for new homes fell about 3% in December from the same month in 2004, according to the report.

Last week, Horsham, Pa.-based builder Toll Bros. Inc. said new orders in its first quarter ended Jan. 31 fell 21%, warning that home deliveries this year would be weaker than expected.

Shares of KB Home fell $1.27 to $65.95.