Homebuilder KB Home (KBH) plans to keep focusing on making homeownership happen for first-time buyers, a winning strategy for the builder during its second quarter.

“Market dynamics are characterized by low existing home inventory and limited availability of new homes at our price points as well as demographics that are particularly favorable for our business, given that we primarily serve the first-time affordable first move-up segments,” KB Home President and CEO Jeffrey T. Mezger said on the earnings call after the market's close Wednesday.

“With respect to demand, buyers are adjusting to higher mortgage rates and the continuation of a more stable rate environment is a positive factor,” he added.

The environment helped boost the builder's second quarter. Adjusted earnings per share came in at $1.94, beating the $1.33 estimate from analysts, according to Bloomberg. Revenue in the quarter totaled $1.77 billion, up from the $1.43 billion expected by analysts.

KB Home said homebuilding revenue amounted to $1.76 billion, up from the $1.43 billion from analysts’ estimates.

With the lack of resale inventory, housing activity is “starting to increase, buyers are demonstrating a higher sense of urgency than we saw earlier this year,” Mezger said.

As a result, net orders jumped 0.6% year-over-year to 3,936, above estimates of 3,363 homes.

The builder’s core strategy of build-to-order has provided stability in deliveries, with 3,666 homes closed during the quarter. This came in about 700 homes higher than its previous guidance, boosted by better build times, fewer cancellations, and improved conversion of unsold inventory.

For the quarter, most of the homes delivered were in the Central and West Coast region.

The homebuilder has pushed through its backlog, down 41% over the last year, reaching 7,286 homes. Regionally, the Southeast and Southwest areas have seen the most improvement in backlog levels compared to a year ago.

California remains sunny

“We believe we are well positioned to leverage our scale and capture the sizable opportunity in our West region, while also continuing to expand across the remainder of our operating footprint,” Mezger said.