Build me up, build me up... buttercup KB. KB Home is kind of like the Chipotle of homebuilding — instead of build-your-own-bowl, KB lets you build-your-own-home (guac's still extra). From September to November, KB's signed purchase contracts soared 42% to the highest Q4 total in 15 years. And more than half of homes delivered went to first-time buyers.
Life-size Barbie Dreamhouse... and Jerome Powell is the Ken doll. The Fed has given us near-zero interest rates to stimulate the economy. Taking out a loan for a house is way cheaper than it was pre-pandemic: mortgage rates notched more than a dozen record lows in 2020. Also: remote work is allowing people to leave cities and flock to suburbs.
It's all about the backlog, baby... "Backlog homes" are houses that have been ordered, but not built yet. Basically, they represent future sales. KB had nearly 8K backlog homes last quarter, up by half from a year earlier. Even though KB's sales were actually down ~20% last quarter, its backlog sales value jumped ~60% to $3B. Since investors are future-focused, KB stock had its biggest daily gain since May yesterday — likely thanks to that sweet backlog.