KB Home swung to a fiscal second-quarter profit as the homebuilder reported higher selling prices across all regions, led by a sharp increase in the Southwest.
For the quarter ended May 31, overall average selling prices climbed 10% to $319,700 from a year ago. It was the seventh consecutive quarter KB Home has reported a double-digit increase in average selling prices. But deliveries slowed, falling slightly to 1,751 homes from 1,797.
KB Home reported higher selling prices even as industry data shows home-price growth has slowed a bit this spring, helped by rising inventory of new homes. Meanwhile, recent data, especially for May, has signaled an upswing in housing demand, coming at a critical time for the industry as it progresses into the key spring and summer home-buying season. Though the housing market appears to be doing well, there are still some worries demand is constrained by some lender reluctance to approve mortgage applications and low participation from first-time homebuyers, among other factors.
KB Home (KBH) reported net orders increased 4.9% in the latest period. The cancellation rate as a percentage of gross orders ticked up to 28% from 27%.
Overall, KB Home reported a profit of $26.6 million, or 27 cents a share, compared to a year-earlier loss of $3 million, or 4 cents a share. Total revenue climbed 7.7% to $565 million. Analysts surveyed by Bloomberg had projected an adjusted profit of 21 cents a share on $565 million in revenue.
KB Home’s backlog climbed 24% to $1.03 billion, reflecting an increase in the number of homes and higher average selling prices. The backlog consists of homes that are under a purchase contract but haven’t yet been delivered to a homebuyer.