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Saturday, Dec 2, 2023

Homebuilder Welcomes Street-Beating Quarter

Westwood-based national homebuilder KB Home reported positive second-quarter earnings last week, spurred by an increase in revenue and completed projects, according to a June 27 filing with the Securities and Exchange Commission.

The company reported earnings of 33 cents a share, exceeding analysts’ expectations of 26 cents. Total revenue grew 24 percent to $1 billion, exceeding Wall Street expectations of $927 million.

The residential builder said it had 1,468 homes in California under contract but yet to be delivered in the quarter – a 22 percent year-over-year increase. KB Home’s net income for the quarter was $31.8 million, roughly 104 percent greater than its $15.6 million tally this time last year. The company’s number of finished homes nationwide rose 11 percent year to year to 2,580.

“Not only did we do better in the second quarter than consensus, we raised our guidance in revenue and expect our momentum to carry on to the second half of the year,” said Chief Executive Jeffrey Mezger.

The company’s share price rose 5.4 percent to just above $24 after the report was released on June 28. The stock closed just below the $24 mark on July 5, for a market cap of $2.04 billion.

KB Home, which builds semicustom houses in communities across the country, is considered the nation’s largest homebuilder in terms of volume, with nearly 600,000 homes built since the company’s founding in 1957. It also offers mortgage banking, title and insurance services.

Analyst Robert Wetenhall of downtown-based RBC Capital Markets said KB Home posted a solid quarter in line with results of other homebuilders.

Mezger cited recent improvements in consumer sentiment and employment, combined with relatively low mortgage interest rates, as the main causes of increased demand.

Short Supply

The positive KB Home earnings report belies the fact that there are still not enough homes being built across the United States. That’s according to UCLA’s Anderson Forecast, released in June.

The report predicted housing starts this year would hit 1.27 million units, below the 1.4 million mark required to keep up with long-term demand.

Senior economist David Shulman, who authored the report, cited tighter credit standards, slow income growth and the shrinking middle class as key factors for the slow housing starts.

Housing prices have increased steadily as a result of the tight supply, a trend that’s been pronounced locally.

The median home value in Los Angeles County sits at $556,400, an increase of roughly 7 percent from the previous year, according to data from online real estate marketplace Zillow. Prices have been on an upward trajectory since 2012.

KB Home reported that the average selling price for its California homes increased roughly 11 percent year over year to $631,000, exceeding the Southwest, Central and Southeast regions by more than $340,000. California makes up the company’s entire Western region.

“I don’t think we are going to see an increase in supply or inventory in the near term,” said UCLA senior economist Oscar Wei, who was not involved in the Anderson Forecast. “Even though we have new construction, as far as single-family homes are concerned, we won’t see a big increase in inventory.”

Celeb Roundup

One Republic frontman Ryan Tedder and his wife, Genevieve, have restored and listed a Beverly Hills home the couple purchased for $7.43 million two years ago from “X-Men: First Class” producer Gregory Goodman. The Tedders added more than 1,000 square feet to the Trousdale Estates property, spending more than $2 million to upgrade its electronic systems as well as add a bathroom, bedroom, family room and three-car garage. The house is listed for $12.7 million with David Gray at Beverly Hills-based Partners Trust. … Gray said he’s seen an increase in nontraditional, high-profile individuals flipping homes recently. “It’s fun and it’s kind of an exciting process and you can make a lot of money if you do it right,” he said. “You got to have deep pockets and patience because most projects take two years.” … Actress and comedian Kristen Wiig has sold her Los Feliz Franklin Hills home for $2 million, according to various reports. Bryony Atkinson of Maisonre Real Estate in Glassell Park was the listing agent and William Bowersock of Keller Williams Realty in Los Feliz represented the buyer. The 1949 home was listed in March for $2.4 million, according to public records. Wiig paid $1.76 million for the three-bedroom, 2,719-square-foot estate in 2013. … Actor Jared Leto has sold his Hollywood Hills house for $2.05 million, roughly $50,000 above asking price. The property was listed by Brian Courville of John Aaroe Group’s Modern Living LA division, based in West Hollywood. The buyer was represented by Ann Eysenring at Beverly Hills-based the Agency.

Staff reporter Natalie Hoberman can be reached at nhoberman@labusinessjournal.com or (323) 549-5225, ext. 226.

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