* Posts first-quarter profit vs loss a year earlier
* Average selling price up 12 percent
* New home orders rise 6 percent
* KB Homes, other homebuilders shares rise
(Adds CEO and analyst comments, updates share price)
By Sweta Singh
March 19 KB Home, the No. 5 U.S.
homebuilder, reported a first-quarter profit for the first time
since 2007 as it sold homes at higher prices in California, its
largest market, and indicated towards a strong spring selling
KB Homes' better-than-expected results sent its shares up as
much as 10 percent and sparked a rally in the stocks of U.S.
homebuilders, including a 3 percent rise in the shares of No. 3
Lennar Corp, due to report results on Thursday.
Los Angeles-based KB Home said on Wednesday its overall
average selling price rose 12 percent in the quarter ended Feb.
28, with the 30 percent increase in the West Coast comfortably
outpacing the rise in the Southwest, Central and Southeast
"California has benefited from home price appreciation as
the markets have recovered, the magnitude of our increase far
outpaces the market," Chief Executive Jeffrey Mezger said on a
The homebuilder said it expects prices in all regions to
continue climbing moderately through the rest of the year.
KB Homes, like its peers, is expected to benefit from a
recovering U.S. economy as buyers become more confident and
adjust to the higher interest rates.
The company saw a dramatic increase in the number of
potential buyers in February, Mezger said, indicating a strong
start to the spring selling season - traditionally the most
important period for builders.
"Thanks Jeff for telling the world that Spring is not a
bust," analyst Ivy Zelman of Zelman & Associates said on the
D.R. Horton Inc, the No. 1 U.S. homebuilder, in
January had forecast a "very strong" spring selling season, but
most analysts have been a bit wary of
"Thus far, we have viewed housing demand this spring selling
season as good, not great, as certain regions have seen
increased traffic year-on-year, while others have seen a
material slowing," analyst Stephen Kim of Barclays wrote in a
note on March 18.
U.S. homebuilder sentiment edged up in March, according to
the National Association of Home Builders, but sentiment
remained below 50, which indicates more builders view market
conditions as poor than favorable.
KB Homes said new home orders, a key indicator for builders
who do not book revenue on a house until the sale is completed,
rose 6 percent to 1,765 units in the first quarter.
The company's quarterly net income was $10.6 million, or 12
cents per share, compared with a loss of $12.5 million, or 16
cents per share, a year earlier.
Analysts on average were expecting a profit of 8 cents per
share, according to Thomson Reuters I/B/E/S.
The company's overall deliveries fell 3 percent to 1,442
homes. While deliveries in the Southwest, Central and Southeast
regions rose, deliveries slumped 32 percent in the West Coast,
due to a lower backlog at the start of the quarter.
KB Homes's backlog rose 4 percent to 2,880 homes as of the
end of the quarter.
Shares of KB Homes were trading up 7 percent at $18.93 in
late afternoon trade on the New York Stock Exchange. They had
touched a high of $19.43 earlier in the session.
(Editing by Savio D'Souza)