KB Home , the No. 5 U.S. homebuilder, posted a wider-than-expected quarterly loss on Friday and reported a year-over-year decline in orders, sending its shares down nearly 8 percent.

Revenue fell 40 percent to $384.5 million, compared with Wall Street forecasts of $337.6 million. New orders, a predictor of future revenues, were down 31 percent from a year ago, to 2,910 homes.

The order drop was worse than expected, noted JP Morgan analyst Michael Rehaut, and stood in sharp contrast to the prior quarter's order growth.

The company's quarterly net loss was $78.4 million, or $1.03 per share, in the second quarter ended on May 31, compared with $255.9 million, or $3.30 per share, a year earlier. The quarter included charges for inventory and joint venture impairments and the abandonment of land option contracts of $49.5 million.

Analysts on average expected a loss of 72 cents per share, according to Reuters Estimates.

KB Home shares were down $1.16 at $13.61 in morning trade on the New York Stock Exchange.

MIXED SIGNALS

The company said mortgage rates remained low, and consumer confidence appeared to be returning. But it noted that tight lending standards and job market weakness might constrain demand for homes.

Although key economic indicators remain mixed, we are beginning to see signs that some negative housing market trends may be moderating at both the local and national levels, Chief Executive Jeffrey Mezger said in a statement.

KB Home's results come amid conflicting data about the health of the housing market and its prospects for recovery.

This week, the government reported a slight dip in new home sales in May, but a trade group reported a rebound in mortgage applications.

At the Reuters Real Estate Summit this week, Pulte Homes
CEO Richard Dugas said the market had flattened, which he said was close to euphoria given the recent downward trend.

The CEO of Meritage Homes , Steven Hilton, told the Summit he saw many positive signs, but noted that June sales were not as robust as sales in May, which marked the company's best month in almost a year.

(Reporting by Nick Zieminski; Editing by Lisa Von Ahn, Dave Zimmerman)