Housing Stocks Fall On Home Sales Data

Concerns remain about the stability of the housing market in the wake of February data which shows that new home sales fell 1.6% in the month. This is the second consecutive month of slipping home sales data. According to the Commerce Department, new sales for single families declined to an annual rate of 313,000 versus 318,000 in January. On a geographic basis, the weakest areas were the South and Midwest, while the Northeast and West were the strongest performers. While home sales were down versus January, they have risen 11.4% versus last February, which is a positive indicator. Furthermore, confidence in the housing market is near a five-month high according to an index released by the National Association of Home Builders. On Friday, KB Home KBH released disappointing quarterly earnings results, which is also driving some of the uncertainty regarding the sector. The company reported a net loss of $45.8 million or $0.59 per share, versus a loss of $114.53 million or $1.49 per share, in the year ago period. This compared to analysts' consensus estimates which called for a loss of $0.24 per share. Revenues for the quarter were $254.56 million, a 29 per cent increase over the $196.94 million that KBH reported a year ago. Nevertheless, the top line results were nowhere near analysts' consensus of $337.72 million. Orders at KBH fell 8% to 1,197 homes and cancellations were 36% versus 29% last year. During Friday's trading session, KBH shares have lost 6.67% to $10.49 and sentiment is sour across the entire sector. Toll Brothers TOL shares are down 1.22% to $23.51, Pulte PHM has lost 3% to $8.85 and Beazer Homes BZH is down 2.26% to $3.46.