Reuters: Global Markets: KB Home profit shows housing recovery on track; stock up

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KB Home profit shows housing recovery on track; stock up Sep 21st 2012, 14:37 By Sagarika Jaisinghani Fri Sep 21, 2012 10:37am EDT (Reuters) - KB Home (KBH.N), the fifth-largest U.S. homebuilder, posted a surprise quarterly profit and said its revenue backlog rose to a four-year high as a strengthening housing recovery pushed up prices and demand. The company's shares rose as much as 7 percent to $14.09 on the New York Stock Exchange on Friday morning. The housing market recovery, which has been patchy, is likely to get a boost with mortgage rates falling to record lows in the wake of the Federal Reserve's decision to bolster the economy by buying housing-related debt. The average rate on a 30-year fixed mortgage fell 6 basis points to 3.49 percent in the week ended September 20, according to Freddie Mac's primary mortgage market survey. That matched the previous all-time low. "Confidence is coming up," said Williams Financial analyst David Williams. "We're seeing new orders, deliveries, average selling prices, everything is moving in the right direction." The Standard & Poor's homebuilder index .GSPHOME, which has almost doubled this year until Thursday, rose a further 2 percent. KB Home earned 4 cents per share for the third quarter. Analysts on average expected a loss of 16 cents per share, according to Thomson Reuters I/B/E/S. BACKLOG SOARS The company, known for its green homes, said potential future housing revenue in backlog at August 31 rose 33 percent to $744.7 million. "It is clear that the recovery in housing is gaining momentum across the country as inventory levels are declining and home prices are on the rise," KB Home Chief Executive Jeffrey Mezger said. The company said it is seeing "dramatic improvement" in its biggest market, California, where foreclosures kept recovery at bay. U.S. housing starts rose 2.3 percent last month to an annual rate of 750,000 units, the Commerce Department said this week. Net orders rose 3 percent for the second straight quarter, to 1,900 homes in the three months ended August. Orders are a key indicator for builders who do not book revenue until they close on a house. Average selling prices jumped 8 percent to $245,100, marking the ninth consecutive quarter of year-over-year increases, KB Home said. Margins rose to 17.5 percent in the quarter from 16.9 percent a year earlier. KB Home's stock has almost tripled in value since touching a year-low last October. (Additional reporting by Kartick Jagtap in Bangalore; Editing by Joyjeet Das) Link this Share this Digg this Email Reprints

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