KB Home Reports Woes From US Housing Market

Major US construction company KB Home has today announced losses over the quarter of some $770 million off the back of a slowdown in demand in the US housing market and the continued credit crunch environment, which looks set to continue to cause problems for construction companies and homebuilders across the US and the rest of the world.

The country’s fifth largest, KB Home specialises in the construction of residential property and has been a first-hand victim of the market slowdown and the overall credit crunch as a result of the sub-prime catastrophe that began to unfold over the summer of 2007, which has seen demand for new housing plummet as well as throwing the banking industry into chaos.

In its last quarter reports released today, KB Home said that it had mad a loss of $773 million and had also taken a writedown of $305.5 million over devaluations of its unsold properties and land values amidst one of the most serious crises the US housing market has ever faced following a number of external economic triggers over the last year.

The company, which had to endure a fall in its overall revenues by almost one third also forecast that 2008 would be difficult in terms of profitability - a sentiment that is shared throughout the industry as home builders and construction companies one by one report very weak performance over the last few months.

Revenues for the final quarter of 2007 were $2.07 billion, down from $3.01 bilion in 2006, whilst the reported loss was much more substantial than the $50 million it lost over the course of the year previous. According to official data reflecting a twelve year low in new home sales, the trend could continue, possibly making the situation even worse for homebuilders.

As a result of these problems, house prices have tumbled, and companies are finding more and more they are left with unsold properties and mounting liabilities. It remains to be seen whether they can weather the storm, with the situation stateside promising to get worse, before it gets any better.

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