KB Home stock slumped nearly 5% after the homebuilder reported earnings per share and net orders for the third quarter that fell short of analyst expectations the previous day.
The homebuilder posted adjusted earnings per share of $2.04 in Q3, lower than Wall Street’s estimates of $2.06 a share, per Bloomberg data. Net orders reached 3,085 during the period ending August 31, which disappointed compared to the consensus estimate of 3,345 homes.
“Buyers were hesitant as interest rates remained elevated and concerns about a slowing economy increased, and demand began to soften in late June through July. In this environment, we took steps to adjust pricing as necessary to hold our pace,” Jeffrey Mezger, KB Home CEO, told investors and analysts during the third quarter earnings call.
But Mezger noted that “rates moderated in August and demand strengthened with our weekly net orders improving sequentially in each of the last three weeks of August…With the Federal Reserve lowering interest rates by 50 basis points last week, we believe this will further benefit consumer confidence and affordability.”
That could bode well for KB and other homebuilders.