Shares in homebuilder KB Home lost nearly 2 percent Monday after Macy's said it was nixing a deal that would have had the Los Angeles company build mock home displays to market Martha Stewart goods.

The displays, featuring 3,000-square-foot model homes, were to be built in New York, Chicago and San Francisco. But Macy's parent Federated Department Stores Inc. pulled back, citing a slipping national housing market, according to a report in the Wall Street Journal.

Macy's does not, however, plan to cut back on plans to sell 1,500 Martha Stewart home items in their stores.

KB Home and Martha Stewart began building co-branded communities together from Southern California to north Carolina back in 2005 and have 10 such communities open or in the works.

Shares in KB were down 83 cents, or 1.9 percent, to $43.66 in afternoon trading Monday on the New York Stock Exchange.

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