KB Home on Friday reported a much smaller fiscal third-quarter loss than a year earlier. The homebuilder said it took fewer write-downs and benefited from higher selling prices, but warned that a slowdown in new orders will hurt its recovery.

The Los Angeles company, which is the fifth largest U.S. homebuilder, reported a net loss of $1.4 million (-2 cents per share) for the quarter ended Aug. 31, compared with a loss of $66 million (-87 cents) a year earlier. Revenue rose 9 percent to $501 million.

Analysts surveyed by Thomson Reuters on averaged had expected a per-share loss of 15 cents on revenue of less than $478 million.

The company stated its future results may not be as strong, because net orders for new homes are down 39 percent. The company attributed that decline to the end of the federal homebuyer tax credit program.

Chief Executive Jeffrey Mezger said that orders in June were half that of May and the new home market continues to face competition from foreclosed homes.

“Sales remain soft and the weak economy continues to be a major impediment to any housing recovery,” Mezger said.

Shares closed up 40 cents, or 3.4 percent, to $12.11 on the New York Stock Exchange.