June 27 - KB Home cut its loss by 88 percent, and expects to turn a profit the next two quarters as it benefits from the housing market recovery. Fred Katayama reports.
KB Home is selling more homes at higher prices, and that helped pump revenue 73 percent in the second quarter, crushing Wall Street's estimates. And the homebuilder narrowed its loss by 88 percent to 3 million dollars. KB was able to boost its average selling price 25 percent to more than 290-thousand dollars. That's the highest level for the quarter since 2006. The company capitalized on demand for larger homes. Regionally, the company saw the biggest rise in net orders from the central and southeastern United States. That helped offset lower orders from the West Coast and Southwest. CEO Jeffrey Mezger said in a statement, "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 ..." The strong report by the fifth largest U.S. homebuilder comes on the heels of rival Lennar, which saw its revenue jump 53 percent and also got higher prices for its homes. It's another sign of the broad recovery in the housing market that is driving the U.S. economy. But mortgage rates have recently spiked higher, and KB's high- flying stock has given back 20 percent since mid-May. Still, those higher rates didn't stop home buyers last week as loan requests rose more than 2 percent.