The housing market got two pieces of bad news Friday. The first being weaker-than-expected earnings for KB Home (NYSE: KBH) and the second being a less-than-expected rise in new home sales last month.
First, the good news. New home sales did rise last month. In the current economic environment, that by itself is good news. Unfortunately the rise was less than analysts had been expecting to see.
According to the Commerce Department, new home sales in August rose by 0.7% to an annual rate of 429,000 homes. This was shy of the 440,000 that analysts had been expecting to see.
Homebuilder KB Home also provided some bad news for the market, as the California-based homebuilder posted a wider than expected loss Friday for its third quarter.
The rise in August new home sales does mark the fifth straight month for increases in new home sales. It was also the strongest report in 11 months, so the news is not all bad.
Basically what we can take from these two reports today is that the housing market's rebound is still on shaky ground, but this really should not come as a surprise to anyone. Everyone knows that the housing market is shaky, so seeing a few bumps in the road is to be expected.
While it would be easy to focus on the negative, I think we should also be sure to realize that we are seeing some positive signs. KB Home did see a dramatic drop in its year-over-year loss, and new home sales did rise. Unfortunately both came in a bit shy of what analysts had been hoping to see.
The area of the country that had the best month for new home sales was the West, which saw a nice 12% jump in sales during the month. The worst region was the Northeast, which saw sales shrink by 16%.
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