KB Home (NYSE: KBH) reported third-quarter 2014 before markets opened Wednesday. The homebuilder reported diluted earnings per share (EPS) of $0.28 on revenues of $589.2 million. In the same period a year ago, KB Home reported an EPS loss of $0.30 on revenue of $549.0 million. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.40 and $646.76 million in revenue.

The company offered no guidance, but the consensus estimates for the fourth quarter call for EPS of $0.53 on revenues of $744.29 million. For the full year, the EPS estimate is $1.30 on revenues of $2.41 billion.

KB Home said that it delivered 1,793 homes in the second quarter, down from 1,825 delivered in the same period a year ago. The average selling price increased by $27,900 to $327,000. The increase was largest in the company’s West Coast region.

The company’s CEO said:

In a slowly recovering economic and housing market environment, we are consistently producing profitable results, growing our community count and generating our highest backlog value since 2008. … During the third quarter, there was an appreciable uptick in our traffic levels which we see as evidence of the pent-up demand for new housing and strong interest in our product offerings. We believe demand will continue to strengthen as consumer confidence, household incomes and mortgage availability improve, creating even greater opportunities to achieve continued success in our served markets.

Gross profit margins came in an 18.8%, up from 18.2% in the year-ago quarter. Gross margin slipped from 18.9% sequentially. Housing backlog is up 37% on a dollar basis going into the fourth quarter of 2014 and up 13% on a number of homes basis.

KB Home posted higher revenue, a sequential improvement in SG&A costs, and higher selling prices. But costs and expenses rose more than 8% from $510 million to $552 million, and that chopped operating income by slightly more than $2 million. Net income was up about $1 million year-over-year, but EPS was lower likely due to an increase of about 8 million in shares outstanding.

Whatever caused the bad miss on both EPS and revenues consensus estimates is a little difficult to pin down, but investors are not waiting for any explanations. Shares were down about 7% in premarket trading and still down more than 6% shortly after the bell, at $15.90 in a 52-week range of $15.40 to $20.78. Thomson Reuters had a consensus analyst price target of around $20.20 before the results were announced.

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