KB Home reported a loss of $45.4 million in the first quarter ended Feb. 29, a loss of 59 cents a share, narrowing its loss by 60% from a year earlier.

But new orders declined, and investors punished the homebuilder's stock, which was down about 9% in mid-afternoon trading.

Net orders totaled 1,197 in the first quarter of 2012, down 8% from 1,302 net orders in the year-earlier quarter, as a 22% increase in the homebuilder's Central region was more than offset by decreases in each of its three other regions.

The builder missed estimates by a wide margin, with analysts expecting a consensus loss of 24 cents in the first quarter, according to Thomson Financial Network.

In the year-ago period, the Los Angeles-based homebuilder lost $114 million, a loss of $1.49 a share

Analysts at Barclays Capital said KB Home "materially" missed expectations across almost every metric: orders, margins and earnings. "We are taken aback by the degree to which KB Home's results diverge from what we are seeing and hearing from other builders, although we would point out that KB Home is one of the few builders whose product we have not visited on our market tours."

Barclays expects weak homebuilding stocks on Friday, with the conversation to center around whether KB Home's results reflect company-specific underperformance or are a harbinger of disappointing results to come from the rest of the builders.

KB Home's loss shrinkage is a result of increased revenue. Also, in the first quarter of 2011, the company had a a joint venture impairment charge of $53.7 million and a loss on loan guaranty of $22.8 million, both related to its former investment in the South Edge, LLC joint venture.

Revenue for the quarter totaled $254.6 million, up 29% from $196.9 million a year earlier, reflecting higher deliveries and an increase in the average selling price.

The average selling price rose 6% to $219,000 from $205,700 from a year ago, resulting from increases in the KB Home's West Coast and Southwest regions that were partly offset by decreases in its Central and Southeast regions.

Homes delivered expanded 21% to 1,150, up from 949 homes delivered in first quarter of 2011. Three of the company's four regions produced higher deliveries.

Gross orders rose 3%. An increase in the cancellation rate to 36% from 29% in the year-earlier quarter led to the year-over-year decrease in net orders.

KB Home reported a backlog of 2,203 homes, representing potential future housing revenues of $460 million, as of Feb. 29. A year earlier, it held a backlog of 1,689 homes, representing potential future housing revenues of $353.6 million.

"We expect investors to question if the entry-level buyer segment is much weaker due to credit availability issues, or if the West coast region is not participating in a broader housing recovery," Barclays said.

"From our calls with industry participants, we do not believe either of these concerns will be borne out by future results, and we believe KB Home's disappointment is going to prove to be anomalous, rather than predictive of the broader group."

The homebuilder's debt balance of $1.59 billion is nearly unchanged from $1.58 billion at the end of fourth quarter 2011.