Leading U.S. homebuilding company, KB Home (KBH - Free Report) has launched Newfield in the Los Angeles County, City of Gardena.
Newfield, a group of 96 three-story townhome-style condominiums, is situated on Normandie Avenue near Highway 91, Interstate 405, Interstate 110 and the Metro Green and Silver Lines. The area offers convenient conveyance options for the residents.
Apart from this, the floor plans at Newfield range from 1,784–1,914 square feet and the homes are ENERGY STAR certified and equipped with advanced energy- and water-saving features. Apart from flaunting the master-planned living amenities, Newfield is in close proximity to California State University, Long Beach, and a number of major employment hubs.
Meanwhile, boosting its connectivity, the residential area is close to beach cities, the South Bay Galleria, Alondra Park and Golf Course, and Harbor-UCLA Medical Center.
KB Home’s third-quarter earnings surpassed analysts’ expectations by 7.7% and also increased 83% year over year. Although the company failed to meet the consensus mark for revenues, the reported figure surged 8.3% on double-digit growth in deliveries and housing revenues as well as improved operating margin. Strong new orders (up 16%) and backlog (up 12%) should favor KB Home as it heads into 2017.
However, community count, which declined during the third quarter, is expected to drop further in the fourth quarter. Also, the company does not expect community count to recover till 2017 beginning.
Overall, the housing market has done reasonably well this year with demand for new and existing homes rising on the back of historically low interest rates, an improving job market and income growth.
An improving economy, low interest rates, positive consumer confidence and a tight supply situation should also favor the sector going ahead.
That said, rising land and labor costs are a drag on the gross margin for KB Home as well as other homebuilders like Lennar Corp. (LEN - Free Report) , D.R. Horton, Inc. (DHI - Free Report) and PulteGroup, Inc. (PHM - Free Report) . Labor shortages are leading to higher wages and delays in construction, which eventually hurt the number of homes delivered. Also, land prices are on the rise due to limited availability. Further, inflation is likely to rise, going ahead.
KB Home carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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