One of the leading homebuilding companies in the U.S.,
) recently started construction of model homes at Rancho
Santalina, a community in San Marcos, San Diego. The model homes
are expected to be ready for consumers by mid February.
Owing to its operational business model KBnxt, KB Home always
begins construction only after a purchase agreement is executed.
Therefore, consumers buying KB homes get the liberty to plan
their homes according to their preference.
They will be able to choose from two types of floor plans, the
Vistas and the Haciendas. Both the collections feature 6
bedrooms, at least 3 and a half baths, large kitchens with built
in islands and covered patios
The rising demand for new homes has led to a favorable situation
in the housing market, where inventory levels are dropping and
prices are moving up. As such most home building companies are
constructing increased number of new homes in order to maintain
the required level of inventory to meet the growing demand.
KB Home intends to open more than 120 communities in 2013, with
more communities scheduled to come up in the later half of the
year. As such, the community count is expected to increase by at
least 15% to 20% by the end of next year. The company expects
profitability for fiscal 2013.
With housing market recovery gaining momentum, KB Home believes
its strategic initiatives including overhead reduction, margin
expansion, and land investments in higher-priced, better-located
communities; and increasing backlog will help it achieve
profitability in the upcoming quarters. Though we have faith in
KB Home's strategic initiatives, we believe that it may take time
to achieve sustainable profitability as the housing market
recovery process is erratic and uneven.
We currently have a Neutral recommendation on KB Home. Both KB
Home and its peer
) carry a Zacks Rank #3 (Hold).
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