KB Home (KBH) is signaling headwinds in the US housing market as the war with Iran drags on.
“This conflict in the Middle East started right at the end of February, and we saw pretty good sales results in the first week of March. But the last couple of weeks have been a little softer than what we would like to see or what we normally get this time of year,” KB Home CEO Rob McGibney told analysts on a late-Tuesday earnings call.
He added, “And we just don’t have a lot of visibility right now as I don’t think anybody does into how long this conflict may go on, and how it’s going to impact consumer psyche and confidence. But we feel that right now, it’s weighing on the consumer.”
McGibney’s comments offer a good snapshot into a consumer now battling through war concerns, rising gas prices, and higher mortgage rates.
Read more: When will mortgage rates go down? War in the Middle East clouds the outlook.
KB Home operates in 49 markets across nine states, primarily in the Sun Belt and West Coast regions. Its largest revenue drivers are California and Washington, two states with some of the highest gas prices in the country.
“Market conditions remain challenging,” Evercore ISI analyst Stephen Kim said in a note on Wednesday.
To add insult to injury for KB Home, its first quarter earnings report was disappointing.
The company missed analyst estimates on the top and bottom lines. Revenue plunged 23% from the prior year.
Key performance metrics were underwhelming across the board:
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Homes delivered decreased 14% to 2,370.
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The average selling price of homes was $452,100, down from $500,700 a year ago.
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Housing gross margins also felt the squeeze, plummeting to 15.3% from 20.2% a year ago.
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The company’s ending backlog totaled 3,604 homes, compared to 4,436 last year.
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Ending backlog value was $1.70 billion, compared to $2.20 billion last year.
KB Home stock fell 3% in premarket trading on Wednesday. It also slashed its full-year guidance.
The company sees housing sales of $4.80 billion to $5.50 billion versus prior guidance of $5.1 billion to $6.1 billion. KB Home now projects full-year home deliveries of 10,000 to 11,500. The previous forecast was for 11,000 to 12,500 homes.
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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