KB Home ( KBH) excited investors with a lower-than-expected loss, but homebuilder stocks have a long way to go in their recovery.

KB Home cut its loss by 78% to $58.1 million, or 75 cents a share. Analysts polled by Thomson Reuters predicted an 81-cent loss. The company has $1.31 billion in cash to boot.

It seems like another reason to be optimistic about homebuilder stocks. But none of these small victories will be enough to counter months of falling prices and sales. February's sales were still down 41% from a year ago. Some could argue that the 20% drop in the median home price to $200,900 will encourage buying, but lower prices will also hurt builders' bottom lines.

"We currently foresee no meaningful improvement in market conditions for the remainder of this year," KB Home Chief Executive Officer Jeffrey Mezger said in a statement today.

Analysts expect the 12 homebuilders in the accompanying chart to remain unprofitable for the rest of 2009. Only half are expected to climb into the black next year.

KB Home is the cheapest stock of the bunch, trading at 15 times next year's projected profit, but that's not saying much. Ryland Group ( RYL) is priced at close to 300 times next year's projected net income while Toll Brothers ( TOL) is trading at more than 100 times next year's earnings forecast.

The bleak prospects of homebuilder stocks are reflected in the D grades, or "sell" recommendations, assigned to the 12 companies on the accompanying chart by TheStreet.com Ratings. Volatility and poor financials also contributed to their dismal grades.

Three of the homebuilders' shares have sunk to penny-stock status with Hovnanian Enterprises ( HOV) emerging from a low of 52 cents in early March.

Although homebuilder stocks have been part of the recent market rebound, they remain far below their levels during the peak of the building boom. The Dow Jones U.S. Home Construction Index, of which each stock in the adjoining table is a component, crashed to less than 150 points from more than 1,000 points in 2005. The index has fluctuated between 220 and 240 points in recent sessions, down more than 75% from its peak.

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