Housing exchange traded funds stayed in the red Wednesday after a report estimating pending home sales jumped 8% in May as disappointing results from KB Home (NYSE: KBH) weighed on the sector.
KB Home shares dropped 8%. “Headline results for KB Home featured a sizable headline earnings-per-share miss and an order print that come in nearly in line with expectations,” Deutsche Bank said in a note.
The headline miss was mostly related to an increase in impairments, a shortfall in margins, and charges stemming from a troubled joint venture, the analysts wrote.
SPDR S&P Homebuilders (NYSEArca: XHB) and iShares DJ US Home Construction (NYSEArca: ITB) were both lower Wednesday.