KB Home Strengthens Foothold in California with New Property

Zacks

One of the leading U.S. homebuilding companies, KB Home (KBH) recently declared that it has acquired land for a new community of single-story, stacked flat condominium homes called Solaire. Located in Sunnyvale, CA, the new community is KBH’s latest addition to its portfolio in California.

Sunnyvale is one of the important cities located in Silicon Valley in the San Francisco Bay Area. KB Home already sells new homes at 14 locations in the region. KB Home has been focusing on the lucrative housing market of California.

KB Home mainly focuses on high-end locations, which drive community count and order growth. In fact, KB Home has witnessed positive order trends in first two quarters of fiscal 2014, after reporting soft order growth for the past few quarters due to a lack of land and lots.

The order turnaround was driven by aggressive land investments made by the company since the second half of 2012. Two other homebuilding companies that witnessed positive order trends in the last reported quarter are Meritage Homes Corp. (MTH) and Lennar Corp. (LEN).

Of late, the company has been strengthening its footprint in California by acquiring land. In fact, on the back of its land investments of $859.6 million in the first six months of fiscal 2014, KB Home expects its community count to increase in the latter half of 2014. The company has planned more than 80 community openings. The recent acquisition is part of the same strategy to increase community count.

With low inventory of both new and existing homes, many of other homebuilders are focusing on land acquisitions to improve their community count. Another homebuilding company, PulteGroup, Inc. (PHM) recently acquired some of the real estate assets of Dominion Homes, one of the leading homebuilders in Columbus, OH and Louisville, KY. The acquisition secures the leading position of Pulte in the Midwest homebuilding markets of Columbus, Louisville and Lexington.

KB Home carries a Zacks Rank #3 (Hold).

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