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Post Info TOPIC: US Homebuilder Stocks Fall on Weaker KB Home Results

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Date: Mar 24 04:52:11 2012
US Homebuilder Stocks Fall on Weaker KB Home Results


US home builder stocks slumped during Friday's session as a weaker-than-expected earnings report from KB Home sparked fears about the all-important upcoming spring selling season.  KB Home reported that new orders fell 8 percent in its fiscal first quarter, fueled by sharp declines in the Southwest and West regions.  The company also said that 36 percent of its orders had been canceled during the three months through February, which furthered the concerns.

KB Home's CEO Jeffrey Mezger tried to downplay the results, saying they are not reflective of current conditions, noting that a large portion of the builder's order cancellations were a result changes made by its primary lender MetLife, which resulted in 140 contract cancellations.  The builder has since switched to Nation Star as its primary lender, and Mezger said the move should result in a steep decline in canceled contracts moving forward.

Nonetheless, KB Home's report stood in stark contrast to recent forecasts from other builders, which painted a picture of a vastly improving housing sector.  The results spooked investors, sending shares of KB Home, Hovnanian, DR Horton, Lennar, Toll Brothers and other builders down sharply.  Analysts were not so quick to panic, however, saying that a better indicator of where the home construction sector is heading will be provided by results from the spring selling season, typically the busiest season for new home sales.

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