KB Home on Friday reported better-than-expected earnings and revenue in its latest quarter, driven by increased demand in the housing market.
Shares climbed 4.3% to $15.61 in premarket trading.
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The housing market has picked up recently, as the Commerce Department earlier this week said groundbreakings surged to a seven-year high in April before falling 11% last month. Permits to build new homes surged 12% last month to an annual rate of 1.275 million, the highest since August 2007. Meanwhile, permits for apartment construction surged, while permits for single-family homes, a much broader segment, rose modestly.
For the fiscal second quarter ended May 31, KB Home posted earnings of $9.6 million, or 10 cents a share, down from $26.6 million, or 27 cents a share, a year earlier. Revenue grew 10% to $623 million. This beat Wall Street expectations of $619 million in revenue and earnings of 8 cents a share, according to Thomson Reuters.
Housing revenue rose 8% to $604.9 million, while land-sale revenue rose to $15.9 million from $2.6 million.
The overall value of net orders, an indicator of the builder's future performance, increased 38% from the prior-year period to $1.05 billion, while net orders rose 33% to 3,015 homes.
The company's backlog as of May 31 was 4,733 homes, a 39% increase from the same period a year earlier. The average selling price rose 6% to $338,500.