The recent jump in mortgage rates has not impacted foot traffic at KB Home’s showrooms and it is not discouraging buyers, according to company executives.
“It is creating more urgency with buyers wanting to get to the closing table quicker,” one executive said during a conference call Wednesday on the company’s second-quarter results.
The average selling price was $290,400, up $57,400 or 25% from the second quarter of 2012.
Revenue totaled $524 million in 2Q, up 73% from a year ago. But the Los Angeles-based builder reported a $3 million loss for the quarter, compared to a $24 million loss in the second quarter of 2012.
Company executives blamed the loss on interest expenses and a $16 million “water-intrusion-related charge.”
KB Home president and chief executive Jeffrey Mezger noted that mortgage credit remains tight and he has seen only “incremental” loosening so far.
“If the economy continues to expand, I think you will see the banks loosen up,” Mezger told Wall Street analysts during a conference call.
“So if rates go up a little bit but underwriting loosens up a bit, I think you will see similar demand if not more. That is why we are not troubled by the little uptick in interest rates right now,” he said.
KB Home ended 2Q with a backlog of 3,130 homes, which represents $826 million in potential future revenue. The company also generated 2,160 net orders in 2Q, up 6% from a year ago.
“We are continuing to run the business like we did a month ago and six months ago,” the CEO said.
