Housing Top Was Sweet for KB Home Pair

As the housing market slumps, few companies are suffering as badly as KB Home(KBH).

The homebuilder specializes in the Southern and Southwestern markets, where the pain is the worst. It recently reported a $172 million quarterly loss from continuing operations, as sales collapsed by a third. And, as we know, the results are similar across the real estate sector and, now, the mortgage business.

KB Home stock has been in free fall for most of the year, plunging roughly 40% since January, trading recently on Wednesday down 2.5% to $31.01.

Cashing out at the top is nothing new for insiders in the hard-hit homebuilder sector, as investors in Toll Brothers(TOL) can attest. Combine the problems in that sector with the recent meltdown of mortgage companies exposed to subprime loan defaults and you have a whole lot of pain to go around in the housing industry.

The beating continued for the homebuilders today, as shares of Beazer Homes(BZH) were punished on rumors that the company was filing for bankruptcy. Beazer called the rumors "scurrilous and unfounded." Beazer fell as much as 42% before recovering, and was recently down 14% to $12.01.

Shares of other homebuilders also were sliding Wednesday. Hovnanian(HOV) was down 9.3%, to $12, Toll Brothers was down 2.3% to $21.43, and Lennar(LEN) slid 2.3% to $29.81.

And what's worse than losing a fortune on these shares? Knowing you bought them at the peak of the market -- possibly from the CEO himself.