The U.S. housing market has been in a steep decline for nearly two years, suffering from declining prices and sluggish demand and, according to KB's chief executive, conditions will continue to erode.
"At this time, we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins," CEO Jeffrey Mezger said in a statement.
"Rising foreclosure rates are intensifying the problem of surplus inventory and will likely drive further home price reductions," he said.
KB Home reported a net loss of $35.6 million, or 46 cents per share, in its quarter ended August 31, versus a profit of $153.2 million, or $1.90 per share, a year earlier. The 2007 net results include $443 million, or $5.73 per share, for the sale of KB's 49 percent stake in its French unit, Kaufman & Broad SA.
The company reported a loss from continuing operations of $478.6 million, or $6.19 per share, due largely to pretax non-cash charges of $690.1 million related to the lower value of land and $107.9 million related to goodwill impairment.
"The negative impact of these conditions on our selling prices and gross margins prompted us to take substantial write-downs of inventory and goodwill in the third quarter," Mezger said.
Revenue fell 32 percent to $1.54 billion. Housing revenue fell 33 percent to $1.53 billion as the number of sales closed dropped 28 percent to 5,699 and the average selling price declined to $267,700, Los Angeles-based KB said.
"We expect housing industry conditions to continue to worsen through the end of the year and into 2008," said Mezger.