LOS ANGELES (AP) - 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 on Wednesday that its fiscal fourth-quarter profit fell 20 percent on rising expenses. Its shares fell 52 cents, or 6.7 percent, to close at $7.22.
But the company's recent trends show improvement. KB's new home orders jumped 38 percent from 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.
"We have a lot of things going for us that we haven't had in years, and it starts with the backlog," President and CEO Jeffrey Mezger said.
The backlog sets KB Home up for a strong start heading into the seasonally slow winter months. Spring is traditionally the peak period for home sales.
Company executives forecast that KB will deliver more homes at higher prices next year than in 2011, as it opens more communities in markets along the California coast and elsewhere that draw wealthier homebuyers.
Mezger expressed optimism that the company has laid the foundation to improve next year, even as the housing market remains hampered by high unemployment, tighter mortgage lending standards and uncertainty over the economy.
"While the challenges of the market certainly remain the same, we're in a very different business as we enter 2012," Mezger said.
Homebuilders' sales have improved this fall against relatively easy-to-beat sales benchmarks in the second half of 2010. That was the worst year for new home sales in half a century.
Sales of new homes climbed nationally in October and September after declining from May through August, as builders cut prices because of depressed demand. Figures on new home sales for November are due out on Friday.
ITG Investment Research Chief Economist Steve Blitz said KB Home's sales trends bolster his view that the housing market has at least bottomed and is headed for a better 2012.
Recent housing data also have been positive.
An industry survey released on Monday showed builders are more optimistic than at any time since May 2010. On Tuesday, the government reported that builders in November broke ground on homes and apartments at an annual rate of 685,000. That's an increase of 9.3 percent from October and the fastest pace since April 2010, the last month a tax credit aimed at spurring home sales was still in effect.
KB Home, which is based in Los Angeles, was ranked the fifth-largest homebuilder in the nation last year, by closings.
The company still caters primarily to first-time homebuyers, who are purchasing 65 percent of the company's houses.
"But it's a high-income first-time buyer," Mezger said. "That's what's different for us now."
KB reported that it earned $13.9 million, or 18 cents per share, for the three months ended Nov. 30. That compares with $17.4 million, or 23 cents per share, a year earlier.
The results beat the 4 cents per share that analysts polled by FactSet expected. It was the company's first net profit in 2011.
Quarterly selling, general and administrative expenses climbed 36 percent to $75.6 million.
Revenue rose 6 percent to $479.9 million from $451 million, topping Wall Street's $467.9 million forecast.
Home deliveries increased to 1,995, while average selling price rose to $238,400 compared with $232,500 in the prior-year period.
Fourth-quarter net orders climbed to 1,494 from 1,085.
For the full year, KB Home lost $178.8 million, or $2.32 per share, compared with a loss of $69.4 million, or 90 cents per share, in the previous year.
Annual revenue slipped 17 percent to $1.32 billion from $1.59 billion.
Net orders rose to 6,632 from 6,556, which was the first rise in full-year net orders in two years.
KB ended the September-to-November quarter with an 11 percent increase in open communities. It is looking to open 25 new communities in the first half of 2012.