KB Home: conditions have weakened since June

KB Home said Tuesday that housing conditions have weakened since its June report, as higher mortgage rates put further pressure on affordability.

Net orders fell 12% from a year earlier to 2,604 in its fiscal third quarter, and the cancellation rate rose to 18%. Deliveries dropped 19% to 2,732 homes at an average price of $473,000.

Housing gross margin fell to 16.5% from 18.2%. The company guided to 10,500–11,000 deliveries for the year and a fourth-quarter margin of 16% to 16.6%, below what analysts had expected. The shares fell about 2% after hours, even though adjusted earnings of $1.05 a share beat estimates.

Chief executive Jeffrey Mezger said resale inventory had reached its highest level in a decade, adding competition for new homes.