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Friday, March 28, 2008

KB Home on Housing: "No meaningful improvement in near term"

by Calculated Risk on 3/28/2008 12:10:00 PM

Press Release: KB Home Reports First Quarter 2008 Financial Results

Our industry continues to confront a growing oversupply of new and resale homes, tight mortgage lending conditions and a highly competitive pricing environment. These conditions drove down sale prices and further compressed margins in the first quarter of 2008, prompting us to recognize additional impairment charges and abandon certain land option contracts that no longer made financial sense. Until prices stabilize and consumer confidence returns, we believe inventory levels will remain significantly out of balance with demand. We do not anticipate meaningful improvement in these conditions in the near term, as it is likely to take some time for the market to absorb the current excess housing supply and for consumer confidence to improve.”
Jeffrey Mezger, president and chief executive officer, KB Home
emphasis added
The little bit of good news was KB Home's cancellation rate improved slightly (similar to other builders):
The Company’s cancellation rate improved to 53% in the first quarter of 2008 compared to 58% in the fourth quarter of 2007. The Company’s cancellation rate was 34% in the first quarter of 2007.
Still, it's hard to be too excited about a 53% cancellation rate!