LOS ANGELES ( TheStreet) -- KB Home ( KBH) shares jumped in morning trading Friday after the homebuilder drastically narrowed its quarterly losses, beating expectations, helped by fewer charges and higher revenue.

KB Home posted quarterly losses of $1.4 million, or 2 cents loss per share, compared with year-earlier losses of $66.1 million, or 87 cents loss per share. Analysts expected the builder to lose $12.8 million, or 15 cents per share.
New Homes

Revenue jumped 9.3% to $501 million. It was the first time in 4 years that KB Home booked revenue growth.

Inventory impairments and land option contract abandonment charges totaled $3.3 million, sharply lower than year-earlier charges of $47.7 million.

KB Home improved its gross margins and moved from being an industry laggard to in-line with its homebuilder peers, noted Stifel Nicholas analyst Michael Widner. Another key positive in the report was word that KB Home's average sales price rose to $214,200, up 5.6% from year-earlier results, the analyst said, though he pointed out that the gain was mostly a function of heavily concentrated price gains in California.

The average price of a KB Home house sold on the West Coast jumped 14.9% to $353,200.

Widner did add the KB Home's report included some negative aspects, namely a 39% drop in year-over-year order volume, significantly below his expectations. He also cautioned that low third-quarter orders and a smaller backlog had "set up the next two quarters as likely tougher than previously expected for EPS."

Earlier Friday morning the Commerce Department reported that sales of newly-built homes were flat in August at a seasonally adjusted annual rate of 288,000, flat from July's upwardly revised data.

July's results were originally reported at a sales pace of 276,000, the worst on record until Friday's adjustment to 288,000. May's new-home sales pace of 282,000 was the slowest pace on record.

August's new-home sales rate represented an 11% decline from year-earlier results.

The median sales price for new houses sold in August fell 0.6% to $204,000, the report said, the lowest since December 2003, while the average selling price was $248,000. The median price was 1.2% lower than year-earlier results. There were 206,000 new homes for sale at the end of August. Inventory fell 1.4% to the lowest level since August 1968. It would take 8.6 months to work through current inventory at the current sales pace.

The report came a day after the National Association of Realtors showed existing-home sales rebounded 7.6% in August to a better-than-expected seasonally adjusted annual rate of 4.13 million units.

Builder Lennar ( LEN) said Monday it returned to year-over-year profitability, beating quarterly expectations on higher revenue and a greater number of home deliveries.

>>Lennar Beats on Return to Profitability

Stocks in the homebuilder sector were mostly higher Friday, on a broadly bullish day for the market with U.S. equities looking to close the week with their fourth-consecutive weekly gain. The SPDR S&P Homebuilders ( XHB), an exchange-traded fund that tracks the homebuilder sector, and the iShares Dow Jones US Home Construction ( ITB) ETF each gained 2.4%.

KB Home jumped 2.7%, D.R. Horton ( DHI) 2.9%, Lennar 3.5% and PulteGroup ( PHM) 3.2%.

The housing market has been under tremendous pressure for some time, and demand fell further after the springtime expiration of federal tax credits for homebuyers. Most analysts agree the situation is likely to get worse before it gets better.

>>4 Top Homebuilder Stocks: Life After the Tax Credit

Near-record-low mortgage rates have failed to spark demand for housing in recent months, but clearly had an effect on homeowners looking to lower their monthly payments through refinancing.

The average rate on a 30-year fixed mortgage fell to 4.44% last week, from 4.47% the week earlier.

A total of 81.1% of all mortgage loan applications last week were for refinancing existing mortgages , up from 80.5% in the prior week, according to data released by the Mortgage Bankers Association on Wednesday. Even so, mortgage applications fell for the third straight week even as mortgage rates remained near all-time lows.

>>Mortgage Applications Dip Despite Rates

We recently asked our readers if another round of homebuyer tax credits would help or hurt the economy. Readers of TheStreet overwhelmingly agreed that another homebuyer tax credit would benefit the housing market and the entire economy. Out of 207 votes, 62.3% respondents voted yes while 37.7% voted no, viewing another tax credit as simply barking up the wrong tree.

>>We Need Another Homebuyer Tax Credit, Poll Says

The housing market saw sales ramp up in March and April as consumers rushed to take advantage of tax credits that offered as much as $8,000 for first-time homebuyers and $6,500 for repeat buyers. Following the expiration of those credits on April 30, the market saw a dramatic decline in demand for the month of May that spilled over into June and July. Lawmakers later extended the deadline to close on a home purchase and still qualify for the tax credit to Sept. 30.

-- Written by Miriam Marcus Reimer in New York.

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