KB Home (NYSE:KBH) stock fell 3.98% (As on September 25, 11:20:45 AM UTC-4, Source: Google Finance) after the company reported third quarter earnings that missed analyst expectations, as the homebuilder provided weaker-than-expected guidance. KB Home’s backlog of homes under contract fell to 5,724 units valued at $2.92 billion, down from 7,008 homes worth $3.40 billion a year ago. Net orders were flat with the year ago quarter. The company experienced variability in demand across the quarter, with softening in late June through July, as buyers continued to evaluate elevated mortgage interest rates, and general economic concerns were rising. As rates moderated in August, the net orders improved. KB Home delivered 3,631 homes in the quarter, up 8% year-over-year, while the average selling price rose 3% to $480,900. Financial services pretax income grew 11% to $11.0 million, mainly due to increased equity in income of the Company’s mortgage banking joint venture. This reflected a higher volume of both loan originations and interest rate locks, as 88% of the buyers financing their home purchases in the current quarter used the joint venture, up from 84%. Net income rose 5% to $157.3 million. The Company’s ending community count grew 10% to 254, and the average community count for the quarter increased 5% to 251. On a sequential basis, the ending community count was up 3%. The Company had total liquidity of $1.46 billion, including $374.9 million of cash and cash equivalents and $1.08 billion of available capacity under its unsecured revolving credit facility, with no cash borrowings outstanding.

Moreover, Homebuilding operating income increased 5% to $189.0 million. The homebuilding operating income margin was 10.8%, compared to 11.3%. Excluding total inventory-related charges of $1.2 million for the current quarter and $.6 million for the year-earlier quarter, the homebuilding operating income margin was 10.9%, compared to 11.4%. The housing gross profit margin was 20.6%, compared to 21.5%. Excluding the above-mentioned inventory-related charges, the housing gross profit margin was 20.7%, compared to 21.5%. These decreases were mainly due to product and geographic mix.

KBH in the second quarter of FY 24 has reported the adjusted earnings per share of $2.04, missing the analysts’ estimates for the adjusted earnings per share of $2.06. The company had reported the adjusted revenue growth of 10 percent to $1.75 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $1.73 billion.

KB Home forecasts full-year housing revenues between $6.85 billion to $6.95 billion, below analyst projections of $7.01 billion. The homebuilder also expects its homebuilding operating income margin to be 11.1% to 11.2%, lower than the 11.5% analysts were modeling.