Net orders in the first two and a half weeks of the ongoing second quarter fell 24% from last year, and issuing a rare mid-quarter update due to the ongoing market volatility fueled by the banking crisis.
The California-based company expects net orders between 3,000 and 3,700, a decline of 14% from a year ago, when steady employment and wage growth fuelled housing demand.
Jeffrey Mezger, Chief Executive Officer, said on a post-earnings call with analysts that the interest rate and economic uncertainties posed a large risk to the near-term demand.
Mortgage rates, which resumed their upward trend in February, are falling again in tandem with the fall in U.S Treasury yields after the recent turmoil in the banking sector has sparked fears of contagion, despite the uncertainty surrounding the housing market.
The Mortgage Bankers Association said on Wednesday that interest rates on the most popular U.S. home loan fell by the most in four months after emergency measures taken to shore up the banking system drove a mad dash by investors to the safety of government bonds.
Lisa Sturtevant, chief economist at Bright MLS, said that the banking crisis could lead to a little bit of an injection of life into the housing market by lowering mortgage rates.
KB Home reported better-than-expected first-quarter revenue, sending its shares up by 3% after the bell.