NY Home Builder Says Cancellations Up, Orders Down

Home builder KB Home said it may need to revise its revenue forecast for the year because of lower orders and more cancellations, reflecting the slowing U.S. home buying market and sending the company's shares down more than 1 percent.

"In the first two months of the year, we have experienced an increase in home order cancellations and a decline in net orders for new homes when compared to the same period last year," the company said in a Feb. 10 filing with the Securities and Exchange Commission.

"If the current trends do not improve, we may be required to moderate our revenue guidance for fiscal year 2006," it said.

But the company said it does not expect to change its estimates of earnings per share, as it has been buying back shares.

Analysts estimate 2006 profit of $11.29 per share on sales of $11.7 billion.

KB's warning is yet another signal of the slowing U.S. housing market. KB builds homes for a wide range of buyers, including first-time buyers who are more sensitive to rising mortgage rates. Last week, luxury home builder Toll Brothers cut its sales estimate for the second time in three months.

In morning trading on the New York Stock Exchange, KB shares traded down 1.1 percent, while the Dow Jones U.S. Home Construction Index, a wide barometer of home building stock activity, was down about 1 percent to its lowest level since October.