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LOS ANGELES (AP) â¿¿ The success of a housing tax credit that helped spur home sales is haunting homebuilders a year later.
KB Home is the latest builder to report a sharp drop in home orders for the December-to-February quarter, against year-ago results that were bolstered by the government incentive. Rival Lennar Corp. saw its orders drop 12 percent during the period.
The trend underscores a persistent obstacle to a housing turnaround: Absent a compelling incentive, many would-be homebuyers are not in any hurry to commit, deterred by concerns that home values could drop further, as well as by high unemployment, strict lending standards and a slow economic recovery.
KB said its new home orders fell 32 percent from a year earlier, while the number of homes it delivered sank 28 percent. The weak sales figures and several one-time charges led to a bigger quarterly loss for the Los Angeles-based company and prompted management to say it doesn't expect the builder will turn a profit for the year.
"While the economy is improving, it is unclear whether the broader housing market is bouncing along the bottom, stabilizing or improving," said KB Home President and CEO Jeffrey Mezger.
He noted that buyers remain cautious and are taking significant time scouting the market, visiting the builder's home developments several times before making up their minds. Still, Mezger said traffic by prospective buyers rose during the quarter versus a year earlier, on a per community basis. And while down overall, the pace of new home orders improved as the quarter progressed, a trend echoed in March.
The average sales price of homes delivered during the quarter rose to $206,000 from $198,000.
The improving sales pace and price is encouraging in light of the so-far lackluster spring home-selling season, the traditional peak period for home sales. Even so, KB doesn't expect its March or April home orders will eclipse those months' prior-year totals, which got a boost from the tax credit.