KB Home, a leading homebuilder, has reported lower sales and earnings for its fiscal fourth quarter. However, the company remains optimistic as it observes signs of improving demand, driven by the Federal Reserve’s indication that it will not be raising interest rates further.
Financial Performance
The company’s profit for the three months ending November 30 amounted to $150.3 million, or $1.85 per share. This reflects a decline compared to the same period last year when the profit stood at $216.4 million, or $2.47 per share. Despite this decrease, analysts surveyed by FactSet had expected earnings of $1.70 per share.
Furthermore, KB Home’s revenue for the quarter fell by 14% to $1.67 billion, surpassing analysts’ expectations of $1.63 billion.
While the number of homes delivered dropped by 10% to 3,407, orders increased significantly by 176% to 1,909. The net order value also experienced a substantial growth of 157%, amounting to $932.6 million. According to the company, these figures represent an improvement in demand and a reduction in cancellations.
Outlook for Fiscal 2024
KB Home has set a target housing revenue range of $6.4 billion to $6.8 billion for fiscal 2024. Although analysts from FactSet projected revenue of $6.66 billion, the company remains confident in its forecast.
Positive Response to Mortgage Rate Decline
“We have experienced a meaningful sequential increase in our net orders for the first five weeks of our 2024 first quarter, as consumers are responding favorably to the recent decline in mortgage rates,” stated Chief Executive Jeffrey Mezger.
As KB Home navigates the market with increasing demand and favorable mortgage rates, it aims to capitalize on these opportunities for growth.
