KB Home beat expectations for fourth-quarter earnings, though revenue and profit were both lower than the year-earlier period. The home builder sees signs of demand picking up.
The company reported fourth-quarter profit of $150.3 million, or adjusted earnings of $1.85 a share, on revenue of $1.67 billion. Analysts expected profit of $1.70 a share on revenue of $1.63 billion.
Fourth-quarter home deliveries of 3,407 also beat expectations for 3,300, but dropped 10% from a year ago. And the average home selling price fell to $487,300, from $510,400 one year ago.Â
Shares of
KB Home
fell 2.1% in after-hours trading, after hitting a new 52-week high during the regular trading session.
CEO Jeffrey Mezger said KB Home ended the year with “solid” fourth-quarter results, and home deliveries that exceeded expectations, reflecting improved build times.Â
Los Angeles-based KB Home, one of the largest U.S. home builders, has seen a “meaningful sequential increase in our net orders for the first five weeks of our 2024 first quarter, as consumers are responding favorably to the recent decline in mortgage rates,” he added.
For full-year 2024, the company expects revenue of $6.4 billion to $6.8 billion, and to increase its community count 12% to about 270, from 242 at the end of November. It expects the average selling price to range between $480,000 and $490,000.
That forecast is higher than full-year 2023 revenue of $6.41 billion, which also beat expectations. KB Home reported full-year 2023 adjusted earnings of $7.03 a share.
The prospect of lower mortgage rates this year, brought on by expected Federal Reserve interest rate cuts, has enticed some potential buyers back to the real estate market. Mortgage applications rose 9.9% for the week ending Jan. 5 on a seasonally adjusted basis.
The overall market composite index measuring mortgage application volume increased to 190.6 for the week ending Jan. 5, compared with an 186.7 reading for the same week a year ago, the Mortgage Bankers Association said Wednesday.
The average 30-year fixed-rate mortgage rose to 6.62% on Jan. 4, according to Freddie Mac, but is still down from around 7% in early December. In a housing market defined by high costs and few homes for sale, lower rates are good news for builders, and new home sales have remained strong.
Joel Kan, MBA’s vice president and deputy chief economist, called the increase in purchase and refinance applications “promising to start the year,” but said it was likely due to some catch-up in activity after the holidays and year-end rate declines.
Two exchange-traded funds that track the home builders and related industries also climbed on Wednesday. The SPDR S&P Homebuilders ETF rose 1.1%, to $95.04, and the iShares U.S. Home Construction ETF closed up 1.7%, to $101.88.
Write to Janet H. Cho at [email protected]
Read the full article here
