KB Home misses on earnings, orders plunge amid higher mortgage rates

Yahoo Finance Live anchors Julie Hyman and Brian Sozzi discuss the decline in stock for KB Home following fourth-quarter earnings.

Video Transcript

BRIAN SOZZI: Let's turn our attention to KB Home. Not a good quarter here. I was just actually reading our very own Dani Romero reporting a little bit more on this earnings report out of KB Home last night. I think some of the big numbers, or the big number that everybody's focused in on, you see the stock down 3 and 1/2% is orders. Orders down 80% in the most recent quarter. It's a stunning decline, of course, driven, in large part, by the slowdown in housing because of rising interest rates.

But another number here, Julie, to think about, orders, so far, quarter to date, down 72%. I mean, these are just stunning declines. But it really goes to show that the state of housing in this country, as those rates have climbed.

JULIE HYMAN: Yeah, and what's interesting about that 72% decline thus far, Sozz, as RBC analyst Mike Dahl points out, things have been getting a little bit better on the rate front, right? We have seen mortgage rates that have come down very slightly from their recent highs.

And that did not seem to help matters, or at least not yet, for KB Home in terms of those orders for the quarter to date, I guess, unless you think a 72% drop is much better than an 80% drop, but not really, right? So it is interesting. And looking at potentially for eventually some kind of recovery in some of these homebuilders based on what happens with rates, but it's not in sight at the moment, Sozz.

BRIAN SOZZI: Yeah, and of course, off the homebuilders, you have to watch mortgage plays like a rocket. You name it. All these companies are in the same boat. But I love, Julie, just listening in on that KB Home earnings call last night. They refused to utter the word 80%. No executor wants to go on an earnings call and say, hey, our orders are down 80%. They just gave the numbers. It made me giggle. Obviously, it's just a play on words.

JULIE HYMAN: Yes, we all read the 80%, so we know what happened. All right.

BRIAN SOZZI: We can all use the calculator, guys. KB Home, we can do math. We can do math.