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Tuesday, January 26, 2021

NYSE:KBH Is Going To Utilize the Housing Shortage to Get Revenue

The last few months have had an extraordinary amount of people searching for homes to purchase. This has led to many people in posh neighborhoods coming up with reports that most of the real estate agents have been cold calling them- with the hope that they would be quite open to selling their houses. Due to the COVID-19 pandemic, most citizens have started working remotely- and this has led to a mass exodus towards the suburbs. The NYSE:KBH is looking to cash in on this mass boom, so as to accelerate the amount of revenue they get from such an event. 

Or one could simply check up the numbers. The demand for houses has led to the median price for any existing home sold has been increased to $310,600, with a 11.4% yoy. Mortgage rates, according to NYSE:KBH, are almost in the sub -3% levels for the third month running. 

Supply is Constrained, as stated by NYSE:KBH

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With demand rising, it would have been conducive if the supply was high too. But, there aren’t many homes that are listed that can satisfy this elevated demand. Realtor.com says that around 400,000 fewer homes are being listed since the pandemic came to the forefront. Most citizens are concerned about their own safety, and this selling process is going to put many at a huge risk. While there is an increase in housing starts, the level seems to be well below what was seen in the early 2000s. 

 NYSE:KBH’s Q3 Solidifies Confidence

A month ago, one would be expecting that the NYSE:KBH would be a combination of earnings/revenue, and upward revisions- something that would keep going over the remainder of 2020. The quarterly revenue of NYSE:KBH brought out some very important points- a revenue of $999 million did blow away any and all expectations for $895.8 million. The EPS of 83 cents/share went well above the expected- 48 cents. With shares trading up quite a bit, you would probably expect something more in return- for the whisper numbers were much higher than the ones published. Jeff Mezger, the CEO of NYSE:KBH, mentioned that they were definitely going on the move so as to take an advantage in the emerging housing boom. 

NYSE:KBH Faces Headwinds, But Don’t Worry

NYSE:KBH has a lot of positives, but there are glaring negatives too. One of the main negatives that NYSE:KBH faces is that they won’t be able to fulfill their increasing backlog. The Q3 backlog rose around 12% to a rate of $2.57 billion- but NYSE:KBH might just have to fulfill their backlogs at a high cost. 

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NYSE:KBH might be moving in to capitulate on the increasing housing demand, but unless it does away with its innate issues, there wouldn’t be a change in real estate.

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