KB Home, the Los Angeles-based homebuilder, fell the most in a year and a half after reporting lower-than-expected quarterly earnings as the transition to a new mortgage partner delayed some deliveries.
Net income for the three months through August was $28.4 million, or 28 cents a share, compared with $27.3 million, or 30 cents, a year earlier, KB Home said today in a statement. The average analyst estimate was for earnings of 40 cents a share, according to data compiled by Bloomberg.
The homebuilder delivered 1,793 homes in the quarter, down from 1,825 a year earlier, a slowdown largely resulting from the changeover during the quarter to Home Community Mortgage LLC, a new joint venture with Nationstar Mortgage LLC.
"We anticipated some minor delays," KB Home Chief Executive Officer Jeffrey Mezger said on a conference call with analysts today. "However, we experienced far more paperwork-processing and approval issues than we expected with the launch. The initial disruption is now behind us and while we have more work to do in fine-tuning this new business, we expect a smoother closing process within the mortgage venture going forward."
The builder also was delayed in completing sales because of labor shortages and the inability of utility companies "to get new communities energized, or meters installed, on completed homes," Mezger said. Most of the sales won’t be lost and were instead pushed into the fourth quarter, he said.
KB Home fell 5.6% to $16.02 at 2:16 p.m. in New York. They plunged as much as 8.4% earlier today, the biggest drop in intraday trading since February 2013. KB Home had the largest decline today among the 11 companies in the Standard & Poor’s Supercomposite Homebuilding Index.
Rising employment and consumer confidence have given the new-home market a boost. Purchases of newly built houses, tabulated when contracts are signed, jumped 18% in August to a 504,000 annualized pace, the highest level since May 2008, Commerce Department figures showed today. The results surpassed the top forecast in a Bloomberg survey of economists.
KB Home's fiscal third-quarter revenue jumped 7% from a year earlier to $589.2 million, fueled by an average selling price that increased 9%. Net orders rose 5% to 1,827 homes.
