KB Home Reports Loss In 1Q

Combined with data this week that showed an increase in sales of new homes and previously occupied homes from January to February, KB Home's earnings were a ray of hope for a housing market beset by sluggish sales and high inventories.

"We are mindful that, even in this difficult economic environment, the fundamental desire for home ownership has not diminished," Mezger said. "If buyers find the right home in the right location at price they can afford, they will make the purchase decision."

New home orders totaled 1,827, and the cancellation rate plunged to 28 percent from 53 percent in the year-ago quarter.

Nevertheless, Mezger said he remained concerned with the economy and job losses, and stressed he was not calling a bottom to the worst housing market since the Great Depression.

"We think it will be difficult for a while," he cautioned.

But tax credits and historically low mortgage rates are helping.

Mezger said the $8,000 tax credit, while raising the interest of buyers, has yet to have a "material impact" on traffic or sales on its own. But the incentive is contributing to increased sales activity in California, which has a new home buyer tax credit of $10,000, he said.