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Housing Top Was Sweet for KB Home Pair

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

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 - Get Report) 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 - Get Report) 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 - Get Report) was down 9.3%, to $12, Toll Brothers was down 2.3% to $21.43, and Lennar (LEN - Get Report) 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.
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BZH $8.38 -15.00%
KBH $13.65 -5.90%
HOV $1.70 -5.00%
LEN $45.79 -4.00%
TOL $27.52 -5.70%


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