KB Home posts second-quarter loss
Los Angeles home builder KB Home widened its loss in its second quarter as the housing market stalled and the company continued to suffer the fallout from the bankruptcy of a Las Vegas development.
The company posted a net loss of $68.5 million, or 89 cents a share, for the three months that ended May 31. That compared with a net loss of $30.7 million, or 40 cents a share, a year earlier.
"Although a broad-based housing recovery remains stalled, it appears that the worst of the crisis is behind the home-building industry as select markets for new homes are showing signs of stability," KB Home Chief Executive Jeffrey Mezger said in a news release. "Uncertainty and caution about the economy are keeping many qualified home buyers from entering the market, even though historically high housing affordability makes this a good time to buy.”
Shares of the company fell more than 8% in early morning trading.
KB Home revenue was $271.7 million, down 27% from $374.1 million a year earlier. Home builders are facing strong headwinds in 2011. Cash-rich investors and other buyers have increased their presence in the market in recent months, and they are mostly focused on foreclosures and other so-called distressed homes, where the borrowers on the properties are having trouble paying their mortgages.
Demand from the more everyday buyer -- those who buy a home to live in -- has become scarce since tax credits expired last year. KB Home and other builders have been trying to lure potential buyers away from the resale market and into their new properties by offering smaller, more affordable models and rolling out more modern, energy-efficient designs.
The company’s loss included charges for inventory impairments and land option contract abandonments of $20.6 million.
The company was also hit with a loss on a loan guaranty of $14.6 million related to the South Edge residential development in Las Vegas –- a joint venture of the company that is now in bankruptcy. South Edge, of which KB Home is a partial owner, is the developer of a massive planned Las Vegas community called Inspirada.
-- Alejandro Lazo
Photo: A KB Home model in the Willow Ranch community of Corona. Credit: Bret Hartman / For The Times