Updated from June 16

KB Home

(KBH) - Get Report

ignited another ferocious rally in the homebuilders Friday with a strong earnings performance.

The Los Angeles-based homebuilder posted a 78% year-over-year earnings gain late Thursday on a 36% revenue jump and ratcheted up full-year guidance. The numbers breezed by Wall Street's estimates and pushed KB shares up 8% early Friday to a 52-week high.

The news set off the latest runup in the housing stocks.

Toll Brothers

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all rose at least 2% Friday morning.

Shares of KB and many of its rivals have more than doubled in the last year. Low mortgage rates and a price run-up in affluent areas have forced the nation's healthy housing market into the spotlight recently.

For its second quarter ended May 31, KB earned $182 million, or $2.06 a share, up from the year-ago $102 million, or $1.20 a share. Revenue surged to $2.13 billion from the year-earlier $1.57 billion.

Analysts surveyed by Thomson First Call had forecast a profit of $1.78 a share on sales of $2.16 billion.

KB said the future looks good as well. The company said its May 31 dollar backlog climbed 52% from a year ago to $6.79 billion, while its unit backlog jumped 31% to 27,089 units. As a result, KB boosted its 2005 earnings forecast to $9 a share from the previous $7.88. For 2004, the company earned $5.70 a share. Analysts had been expecting about $8.

"Our outstanding second quarter performance underscores the strength of KB Home's geographically diverse operations," said CEO Bruce Karatz. "Consumer demand in our markets remains vibrant, fueling strong growth in unit deliveries and selling prices." He added that a "significant improvement in our margins during the quarter amplified the impact of top-line growth."

KB's average selling price jumped to $247,800 in the second quarter from $216,800 in the year-earlier quarter, reflecting substantial pricing power everywhere, the company said.

Early Friday, KB surged $5.36 to $77.61.