KB Home posts better than expected quarterly earnings

Writedowns have been hurting the company, as it has tried to deal with falling home prices, but in the first quarter it had fewer writedowns, and a nice increase in orders. Despite the tough real estate market, KB Home actually saw a 26% rise in net orders.

A big reason for rise in orders has been a shift to smaller, more affordable floor plans, bringing in extra consumers to their market. While there are some positive signs that the housing market may be close to a bottom, if it is not already happening, KB Home sees no change happening just yet.

Chief Executive Jeffrey Mezger stated that he has not started to see "meaningful improvement in market conditions." He states that the main problems still facing his company are excess inventory, falling home prices, impaired credit system, unemployment and weak consumer confidence.

While Mezger's assessment of the situation is alarmingly accurate, there have been some signs of life for the housing market. Earlier this week we did see a jump in new home sales of 4.7%. While it was good to see this jump, we also have to keep in mind it was following on the heels of January's record lowest ever level... but good news regardless.

The stock is trading up over 6% in mid-morning trading.

It will take a little more time to figure out how the housing market is going to react this year, but by almost every one's estimates, the absolute earliest time to hope for a recovery will be late this year. What are your thoughts on this? Have we seen a bottom for the housing market, or is there still more pain on the horizon? Let us hear your opinions.