KB Home announced Monday it is opening a unit to target the rapidly appreciating Washington, D.C. housing market.

The new Mid-Atlantic unit led by division president Mark Kinsley will build homes in the nation’s capital, Maryland and Virginia where home prices jumped twice the U.S. national average in the second quarter.

KB Home plans to build 147 homes in Virginia, and the company has entered into a partnership with Centex Corp. to build half of a 2,000-home community in Maryland.

“It’s a strong market with strong job growth and population growth,” said KB spokesman Daniel Weidman. “We feel strongly that it’s a market that’s growing.”

Already, the company has East Coast operations in Florida, Georgia, North Carolina and South Carolina.

However, Credit Suisse First Boston analyst Ivy Zelman warned in a July 5 report that KB, the nation’s sixth-largest homebuilder by stock market value, faces “alarming” risks from speculators in several of its markets.

Zelman, who cut KB to underperform from neutral in the report titled “Investors Gone Wild,” wrote at the time that KB faced an “alarming” level of risk in markets such as Las Vegas, Los Angeles, Phoenix, Fresno and Bakersfield.

Washington D.C. could be added to that list. Home prices in the metropolitan area grew 26 percent in the second quarter from a year earlier, Bloomberg News reported, citing data from the Office of Federal Housing Enterprise Oversight. D.C. home prices have doubled in the past five years.

Those risks aren’t marginal, Zelman wrote in her report. The company’s sales would drop 7 percent if investment purchases by speculators returned to the historic average, she said. However, Weidman maintained KB is protected from a potential market fall-out. “We don’t build on spec,” he said. “We are certainly not doing that and we haven’t for many, many years.”