Revenue Sinks at KB Home

The company expects housing industry conditions to continue to worsen through the end of the year and into 2008, and it said rising foreclosure rates are intensifying the problem of surplus inventory and will probably lead to further reductions in home prices.

"Our third-quarter results reflect the seriously challenging market conditions that prevail for homebuilders across most of the nation," said Jeffrey Mezger, president and chief executive of KB, in a press release. "The oversupply of unsold new and resale homes and downward pressure on new home values has worsened in many of our markets as tighter lending standards, low affordability and greater buyer caution suppress demand, while higher foreclosure activity combined with heightened builder and investor efforts to monetize their real estate investments boost supply."

The company also said that at this time, "we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins." Still, KB is "making steady progress on strengthening our balance sheet and aligning our operations and investment strategy with current market conditions and our longer-term expectations for the business."

Earlier this week, Lennar (LEN Quote) said it lost $514 million, or $3.25 a share, for the most recent third quarter, reversing the year-ago profit of $207 million, or $1.30 a share.

Shares of KB were down 0.6% to $23.95 in premarket trading Thursday.