Home Market News KB Home Q3 earnings reflect steady demand, but average sales price slips

KB Home Q3 earnings reflect steady demand, but average sales price slips

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KB Home Q3 earnings reflect steady demand, but average sales price slips
KB Home Reports Lower Earnings

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KB Home (NYSE:KBH) announced its fiscal Q3 earnings, reporting a solid demand for homes despite higher mortgage rates. However, the average selling price for the year was revised downwards.

According to Jeffrey Metzger, Chairman, President, and CEO of KB Home, “Demand remained steady throughout the quarter, resulting in a community absorption pace of 4.3 net orders per month, even as mortgage interest rates increased.”

KB Home (KBH) now expects housing revenue for FY2023 to reach $6.31B, surpassing the average analyst estimate of $6.15B and the company’s previous guidance of $5.80B-$6.20B.

The anticipated average selling price for FY2023 is $481,000, a slight decline from the previously expected $485,000 which was announced during the release of its fiscal Q2 earnings.

KBH stock experienced a 2.5% decline in after-hours trading.

Fiscal Q3 EPS came in at $1.80, exceeding the consensus estimate of $1.46. However, this amount is lower compared to Q2 EPS of $1.94 and Q3 2022 EPS of $2.86.

For the quarter ended August 31, 2023, the average selling price was $466,300, a decrease compared to $479,500 in the previous quarter and $508,700 in the same quarter last year.

The cancellation rate for Q3, represented as a percentage of gross orders, remained stable at 21%, slightly lower than the 22% rate in Q2 and significantly lower than the 35% rate in the year-ago quarter.

In Q3, there were 3,097 net orders with a value of $1.51B. This is a decrease from Q2, which had 3,936 net orders valued at $1.90B, and Q3 2022, which had 2,040 net orders valued at $979M.

The ending backlog value for the quarter was $3.40B, down from $3.46B in the previous quarter and $5.26B in the same quarter last year.

A conference call will be held at 5:00 PM ET.