KB Home 3Q loss widens as housing slump drags on

Chief Executive Jeffrey Mezger said weak demand for new homes--half of the company's homebuyers backed out of their contracts in the quarter--and falling home values don't appear likely to improve significantly in the near term. He also blamed rising foreclosures and tight lending standards for the company's poor results.

"These difficult conditions have now been exacerbated by the recent, unprecedented turmoil in financial and credit markets," said Mezger.

And the Bush administration's proposed $700 billion bailout of the financial industry, he said, "provides no direct relief for housing."

The Los Angeles-based company reported a net loss of $144.7 million, or $1.87 a share, for the three months ended Aug. 31. Those results paled compared to the loss of $35.6 million, or 46 cents a share, in the same period last year, when KB Home recorded a generous gain from the sale of its French operations.

But without those gains, the year-ago losses totaled a whopping $478.6 million, or $6.19 a share.

The latest results included pretax charges of $82.2 million to write down the value of inventory and joint ventures.

Revenue fell to $681.6 million from $1.54 billion, as continued deterioration in new home demand and pricing, excessive inventories and less mortgage availability hurt sales across most markets.

Analysts polled by Thomson Reuters had predicted a loss of $1.22 per share on revenue of $734.7 million.

Congress and the White House were working Friday to hammer out the details of a proposed $700 billion bailout of the nation's financial sector and restart the flow of credit that threatens to cause a widespread financial meltdown.