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KB Home (KBH) Opens New Single-Family Community in Compton (Revised)

Zacks

KB Home KBH recently announced the opening of Edgemont, the builder’s newest gated community of single-family homes in Compton. The community will attract homebuyers since it is located in the neighborhood of centrally located Los Angeles metro area and is easily commutable to Interstates 105 and 710, as well as Highway 91.

The homes at Edgemont will certainly be desirable. The same will be built per the latest ENERGY STAR guidelines and include WaterSense, which will help homebuyers save more than $900 a year in utility costs.

KB Home’s top priority has been to boost community count for driving revenues. KB Home is a highly consumer-centric company. It focuses on Built-to-Order approach, which provides buyers with a wide range of choices, concerning major aspects of their future home.

Notably, the company’s net orders per community increased 11% in the third quarter to 4.1 per month, reflecting growth in each of its four regions, namely West Coast (comprising California), Southwest (including Arizona and Nevada), Central (constituting Colorado and Texas) and Southeast (comprise of Florida, Maryland, North Carolina and Virginia). The company experienced strong absorption rate in the third quarter, owing to faster sell-out rate of communities compared with KB Home’s earlier expectation.

Although average community count declined 7% in the quarter, the company has plans to boost the same for fiscal 2018. Also, KB Home anticipates healthy community count growth in each quarter of 2019, with considerably higher planned openings in the first half of 2019 compared with the year-ago quarter. This expectation is backed by growth in lot count in the third quarter, with owned and controlled lots up approximately 2,100.

Overall, strong housing market fundamentals on the back of healthy job market, higher consumer confidence, increasing household formation and demand from millennials bode well for KB Home and other homebuilding companies in the industry like D.R. Horton, Inc. DHI, PulteGroup, Inc. PHM and Century Communities, Inc. CCS.

(We are reissuing this article to correct a mistake. The original article, issued on October 2, 2018, should no longer be relied upon.)


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