KB Home reports unexpected loss

Homebuilder puts quarterly operating loss at $174.2 million, says it continues to see deteriorating market conditions.

NEW YORK (CNNMoney.com) -- Homebuilder KB Home has become the latest company in its battered sector to report a loss, as it says it continues to see deteriorating market conditions.

KB Home (Charts, Fortune 500) reported a second-quarter operating loss from continuing operations of $174.2 million, or $2.26 a share. A year earlier the company had earnings from continuing operations of $184.4 million, or $2.20 per diluted share.

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Most of the loss was due to a non-cash charge of $308.2 million related to the writedown in the value of inventory and joint ventures, and the abandonment of land option contracts.

Analysts surveyed by earnings tracker First Call had forecast earnings per share of 7 cents, and while its not immediately clear how they will consider the charges when making comparison of actual results to forecasts, analysts have typically counted those types of charges against results.

On Tuesday, No. 1 homebuilder Lennar (Charts, Fortune 500) reported a loss of $1.55 a share, rather than the forecast narrow profit, due greatly to a similar charges of $1.33 a share. Analysts did not exclude those charges when comparing results to their forecasts.

KB Home's statement said it can't predict when it will see improvement in the market for new homes.

"Our second-quarter results reflect the current oversupply of new and resale housing inventory, a difficult situation compounded by aggressive competition and continued weak demand," said a statement from CEO Jeffrey Mezger. "Housing affordability challenges and tighter credit conditions in the subprime and near-prime mortgage market have also exacerbated current market dynamics, keeping prospective buyers out of the market, slowing the absorption of excess supply and further delaying a housing market recovery."

The sharp downturn in new home sales and prices have hammered results of all the nation's major builders. Besides the losses at KB Home and Lennar, builder Centex (Charts, Fortune 500) and Pulte Homes (Charts, Fortune 500), Beazer Homes USA (Charts, Fortune 500) have both posted an operating loss in their two most recent quarters. Hovnanian Enterprises (Charts, Fortune 500) has had three quarters of losses. Top of page