Centex, KB Home Will Write Off $800 Million for Land

Centex Corp. and KB Home, two of the largest U.S. homebuilders, said quarterly earnings were depressed by $800 million in costs to write off the value of land and abandon options to buy more property.

Centex, the third-largest U.S. homebuilder, booked $510 million in charges for land write downs and will cancel options on 37,000 lots. KB Home, the fifth-largest, will have a $255 million expense to reflect the reduced value of land and another $88 million charge to walk away from land-option contracts.

Home construction companies are canceling contracts and taking impairment expenses for their property holdings after facing the worst housing market in 15 years. Sales of new houses tumbled 18 percent in 2006 to 1.05 million, the biggest contraction since 1990.

``We are navigating through one of the most challenging housing environments in the past 25 years,'' Centex Chief Executive Officer Tim Eller said in the statement.

Centex said it will either cancel options to buy 37,000 sites or allow them to lapse, triggering costs of $150 million. Land valuation write downs will cost $300 million, while the company also set aside a $60 million provision to cover liabilities for a federal tax audit.

Los Angeles-based KB Home said in a U.S. Securities and Exchange Commission filing its charges will affect earnings for the fiscal fourth quarter ended Nov. 30.