KB Home foresees an upturn

KB Home is increasingly catering to more affluent homebuyers in markets where there is less competition from homes up for resale and foreclosures, and the strategy is paying off. The homebuilder reported Wednesday that its fiscal fourth-quarter profit fell 20 percent on rising expenses. Its shares closed down 52 cents, or 6.7 percent, to $7.23. But the company's recent trends show improvement. KB's new-home orders jumped 38 percent from a year earlier, and home deliveries rose 4 percent. The average selling price of the builder's homes rose 3 percent. The surge in home orders drove a 61 percent increase in KB's backlog of homes under contract at the end of the quarter -- at 2,156, the highest year-end level since 2008. Backlog is a leading indicator of potential home deliveries and revenue for homebuilders. The backlog sets it up for a strong start heading into the seasonally slow winter months. Spring is traditionally the peak period for home sales.

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