KB Home said its fourth quarter earnings fell 20 percent – largely due to higher expenses and lower margins on homes sold – but noted that new orders and prices were up significantly as it builds in wealthier communities.

The Los Angeles homebuilder on Wednesday said that net income for the quarter ended Nov. 30 fell to $13.9 million (18 cents a share), compared with $17.4 million (23 cents) in the same period a year earlier.

But revenue rose 6.4 percent to nearly $480 million, with new home deliveries up 4 percent to 1,995 homes. The average selling price rose 2.5 percent to $238,400. Selling, general and administrative expenses jumped 36 percent to $75.6 million.

Analysts surveyed by Thomson Reuters on average had expected a profit of 3 cents a share on revenue of $471 million.

Orders climbed 38 percent to 1,494 homes. The company’s backlog of orders grew 61 percent to 2,156 homes, which Chief Executive Jeffrey Mezger said was the highest year-end level since 2008.

“We believe these results demonstrate our success in adapting to current market realities and positioning our business for the future,” said Mezger in a statement.

KB strategy in the weak market is to build homes in wealthier communities, such as along the California coast, where even first-time buyers have more money.

For the full year, KB Home reported a loss of nearly $179 million ($2.32), 157 percent larger than in fiscal 2010. Revenue fell 17 percent to $1.32 billion.

Shares on Wednesday closed down 52 cents, or 6.7 percent, to $7.22 on the New York Stock Exchange, and lost another 4.6 percent to close at $6.89 on Thursday.