KB Home chief says prices are stabilizing in some areas
The head of one of the nation’s largest home builders said Friday that home prices were stabilizing in some parts of the country but ongoing economic woes would continue to challenge the housing market.
“In many markets we’re seeing a bottom form on price,” KB Home Chief Executive Jeffrey Mezger said in a conference call with analysts.
In some areas of Southern California where the company sells homes, monthly payments “are lower than rent today,” he added.
The Los Angeles company targets first-time buyers, and in California many of its projects are in the areas hardest hit by foreclosures, where home prices have fallen most dramatically.
KB Home’s average selling price for one of its homes fell to $216,200, down 4.6% from $226,600 a year earlier.
For the three-month period ended May 31, KB Home’s second-quarter loss narrowed to $78.4 million, or $1.03 a share, compared with a year-earlier loss of $255.9 million, or $3.30 a share. Analysts surveyed by Bloomberg had expected the company to lose 63 cents a share.
Revenue dropped 40%, to $384.5 million from $639.1 million in the year-earlier period. The company ended the quarter with $1.1 billion in cash.
KB Home shares fell $1.35, or 9%, to $13.42 in regular trading Friday. The home builder’s shares have plunged 44% from their 52-week high of $23.87 on Sept. 19.
KB Home has cut the size and prices of its homes to compete with low-priced foreclosed homes in many of its markets.
Net new home orders were down 31% in the second quarter from the year-earlier period, to 2,910 homes. The total was up 59% from the previous quarter.
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