• Jeff Matthews

That Was Then…

“Our results to date in fiscal year 2006 reflect these broader market trends. In the first two months of the year, we experienced and increase in home order cancellations and a decline in net orders for new homes when compared to the same period last year.”—KB Homes 10K One of the big headlines in today’s Wall Street Journal is that KB Homes is seeing a surge in order cancellations amidst a cooling real estate market.

Now, it’s only fair to point out that statement was made in a 10K filed on February 10th so this is not exactly breaking news.

But the change in direction is notable, particularly in comparison with KB’s optimistic outlook a mere 60 days ago.

Back in its December earnings call, KB Home’s management told Wall Street’s Finest all was well in the housing bubble.

“Housing demand remains solid in the vast majority of our markets,” CEO Bruce Karatz said on the call, despite a moderation in the overall housing market which he characterized “as expected.”

Asked for specifics, the KBH COO said the company was “still seeing incremental small [price] increases in both” Phoenix and Las Vegas. “We are not seeing a lot of buildup in the resale inventories.”

When asked if “there are any markets that you guys are maybe seeing very different slow conditions today versus what you were seeing maybe a few months ago…?” the company’s COO said this:

“No. As a matter of fact I would say—I mean you are comparing it to a few months ago. I would say generally improving conditions in the weaker markets.” That was then. This is now.

Jeff Matthews I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

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GENERAL

The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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