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Earnings Preview: KB Home To Report Fiscal 1Q

ALEX VEIGA

LOS ANGELES (AP) â¿¿ Home builder KB Home reports its fiscal first-quarter results before the stock market opens on Tuesday.

WHAT TO WATCH FOR: How the builder's new home orders fared in December through February and any signs demand picked up in March as the traditional spring home-selling season began.

Home builders are hoping for a sales lift this spring after a dismal 2010, the fifth consecutive year that new home sales declined. Sales sank last year to the lowest level on records going back 47 years.

New home sales tumbled in January and February. Winter weather received some of the blame, but other signs also point to a soft start to this spring's home sales.

Last week, builder Lennar Corp. reported new home orders fell 12 percent from a year earlier for the three-month period ended in February.

Builders got a spring sales lift last year. This year, however, the industry doesn't have the aid of federal homebuyer tax credits to spur sales. And many would-be homebuyers remain deterred by high unemployment, strict lending standards and concerns that home values could drop further.

JMP Securities analyst Michael Smith expects KB Home will report a 20 percent annual drop in new home orders for the quarter. Analysts' consensus estimate calls for a decline of about 4 percent, according to FactSet.

In addition to the makings of a sluggish spring home-selling season, builders also face a tough slog beating their sales numbers from last spring, when temporary federal tax credits helped coax reluctant buyers to purchase homes, lifting sales industry wide.

Sales tanked in the summer and remained weak through most of the year, which means KB and other builders should have easier sales benchmarks in the second half of this year.

WHY IT MATTERS: Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates. KB Home, based in Los Angeles, builds homes to order for entry level, move-up buyers and seniors in 12 states. So its performance offers insight into the economy's performance overall.

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