Dive Brief:
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Los Angeles-based builder KB Home posted a 21% overall revenue increase during the fourth quarter to $1.9 billion while housing-specific revenues were up by the same amount, the company said. For the year, housing revenues climbed 23% to $3.6 billion while deliveries increased 20% to 9,829 homes.
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Deliveries rose 19% during the period to 3,060 homes, with the strongest growth in the company's West Coast, Central and Southeast regions. New orders were up 20% for the quarter while backlog increased by 11%.
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Prices climbed 2% in the fourth quarter to $387,400 while adjusted housing margins dipped 60 basis points to 21.6%. For the year, prices were up 3% to $363,800 while margins rose 10 basis points to 21.1%. The builder is forecasting an average selling price in the range of $360,000 to $365,000 for the first quarter of 2017.
Dive Insight:
KB Home remains bullish on the housing market’s fundamentals despite recent mortgage rate increases.
In a call with analysts this week, KB Home CEO Jeff Mezger said the company is poised to serve the growing group of first-time buyers entering the housing market. That buyer segment accounted for 55% of the company’s deliveries during the fourth quarter as rising consumer confidence, wage growth and healthy employment levels balance the interest rate increases, he said.
Last month, the homebuilder opened its Lancaster Square development in Cypress, TX, northwest of Houston. The community will offer seven one- and two-story plans from 1,585 square feet to 2,910 square feet priced from the $170,000s.
Meanwhile, the skilled labor shortage continues to challenge builders and KB Home is no exception. Mezger attributed that factor, in part, to a 4.8% increase in the company's costs to build during the year, which adds an additional $5,000 per house that it has been able to mostly offset with higher selling prices.
In October, it was reported that the company was selling off 20 parcels, comprising more than 2,000 lots, as it looks to cut inactive inventory.
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