KB Home Chief Executive Jeffrey Mezger called the U.S. housing market “a mixed bag” in the homebuilder’s recent fourth-quarter earnings call. He easily could have been referring to the earnings results themselves.

While orders for homes and average sale prices were up year over year in the quarter, the Westwood company’s gross margin was down from the previous period. As a result, shares fell 16 percent Jan. 13, the day earnings were released. And they continued to slide for most of last week, closing at $11.94, down 12 percent for the week ended Jan. 21 to land among the biggest decliners on the LABJ Stock Index. (See page 76.)

In the call, Mezger said “we generated a disappointing fourth-quarter adjusted housing gross margin of 18.7 percent, which was down 30 basis points from the third quarter.”

He noted KB’s gross margin will continue to lag the prior year for some time. Management projects its first-quarter gross margin will drop significantly from last year before improving sequentially for the following three.

“There is no one item that will drive an improvement in gross margin,” Mezger added. “It is a menu of many actions in both revenue and cost, and we are aggressively addressing all of them. Although at this time we do not expect to reach our housing gross-profit margin goal of 20 percent in 2015 as we had hoped, this remains the target level we are working toward for the near future.”

“Primarily their cost of sales are up,” explained Craig Sterling, head of research for EVA Dimensions in New York. “They’re spending more money to build the houses. In fact, it’s the highest since before the credit crisis.

“The last two quarters their operating margins have fallen almost 180 basis points, which is a lot,” Sterling said.

Analysts at JP Morgan downgraded their price target for the company to $15 from $19.50. They wrote in an investment note that while a lower stock rating should limit further downside, “we believe the company’s material lowering of gross-margin guidance and continued execution missteps should limit material upside in the near to medium term.”

Representatives of KB Home wouldn’t comment on its stock performance.

The stock also might have been hurt by last week’s news that builder confidence in the market for newly built single-family homes declined one point to 57, according to the National Association of Home Builders. Any number over 50 indicates that more builders view conditions as good than poor.