KB Home Orders Jump, Showing Strength in U.S. Housing Rally

(Bloomberg) -- KB Home reported quarterly orders that beat expectations, further evidence that the pandemic has accelerated demand for new homes across the U.S.

• Orders for the three months through August rose 27% from a year earlier to 4,214, according to a statement Tuesday. Analysts surveyed by Bloomberg were expecting 3,920. The shares slipped in late trading.

Key Insights

• Expectations were high because many of KB Home’s competitors have reported skyrocketing demand. M.D.C. Holdings Inc. said orders in July and August jumped 75% from a year earlier, and luxury builder Toll Brothers Inc. reported a 110% increase year-over-year for Aug. 1 to Sept. 15.
• Orders increased in each of KB Home’s four regions, with the company getting a boost from its focus on first-time buyers. Demand remained strong after the end of the quarter, with orders in first three weeks of September rising 32% from the same period a year earlier, according to the statement.
• Unlike competitors, KB Home doesn’t have much inventory of properties that are under construction or completed and ready for occupancy. That build-to-order model may have cost the company some sales, though Chief Executive Officer Jeffrey Mezger touted it as a benefit, “underscoring the robust demand for the choice and personalization we offer.”

Market Reaction

• KB Home shares were down 0.5% in late trading, to $40.29 at 6:11 p.m. in New York. They have climbed 18% this year, trailing the 30% gain for an S&P index of homebuilder stocks.

Get More

• Click here to read the earnings statement.

©2020 Bloomberg L.P.