Home builder KB Home sees the housing market moderating, but it still expects to achieve this its revenue goals this year.
Shares of the California-based builder rose after the company reported better-than-expected earnings Wednesday. KB Home (ticker: KBH ) reported diluted second-quarter earnings per share of $2.32 on revenue of $1.72 billion. Consensus expectations gathered by FactSet had anticipated earnings of $2.04 on revenue of about $1.65 billion. Earnings per share were 55% higher than the same quarter last year, the company said.
In a release, CEO Jeffrey Mezger said higher mortgage rates and inflation were leading to a moderation in sales. He noted the company’s business model of building homes after they’re ordered “will enable us to navigate these changing market conditions.” The CEO added that, as a built-to-order builder, KB Home offers buyers a multitude of floor plans in an array of price points. “Our approach resonates with buyers and is a key reason we have sustained among the highest absorption rates in the industry for many years,” he said.
Despite the slowdown in sales, the company said they are standing by their previous guidance. KB Home said it expects 2022 housing revenues in the range of $7.30 billion to $7.50 billion and an average selling price of approximately $500,000.
Shares of KB Home have been on the rise this week, climbing an additional 2.9% in after-hours trading Wednesday after gaining 2.4% in the regular session. Still, the stock has a long way to go to reclaim lost ground lost. Shares are down about 41% this year.