KB Home results signal housing recovery

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(Global Markets) - KB Home (KBH.N) signaled a return to profitability after two quarters of losses as higher selling prices and new orders provided more evidence of a fledgling recovery in the U.S. housing market, driving up its shares 7 percent.

KB Home said net orders increased 3 percent to 2,049 homes in the second quarter, and rose 18 percent in value to $503.1 million.

"Entering the second half of 2012, we have a strong backlog of homes with higher selling prices and better margins to help restore profitability," Chief Executive Jeffrey Mezger said in a statement.

Rival Lennar Corp (LEN.N), the first to release second-quarter results from the homebuilder pack this week, reported a 40 percent jump in orders.

Lennar, the third-largest homebuilder by revenue in the United States, said it was able to charge higher prices as home buyers looked to take advantage of record-low interest rates.

KB's second-quarter net loss narrowed to $24.1 million, or 31 cents per share, from $68.5 million, or 89 cents per share, a year earlier.

The company's shares, which lost 6 percent in the three months to Thursday's close, were up 6 percent at $9.20 in morning trade. They touched a high of $9.28. The broader S&P 1500 Homebuilding Sub-Industry Index .15GSPHOME was up 3 percent.

(Reporting by Bijoy Koyitty in Bangalore; Editing by Viraj Nair and Ted Kerr)