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Shares of KB Home (NYSE:KBH) are surging today after the homebuilder reported better-than-expected third-quarter earnings. For the three months that ended August 31, the nation's fifth largest homebuilder by volume said its total revenue rose by 29% and that its operating earnings more than tripled compared to the same period last year.

"The momentum we have built in our business continued to fuel our financial performance in the third quarter as we generated strong revenue, net income and earnings per share results," said Jeffrey Mezger, president and chief executive officer. "We are clearly seeing meaningful top-line and bottom-line benefits from our strategy of investing in attractive land positions across the country, primarily targeting locations with limited housing inventory and higher household incomes."

The market's reaction to the results, however, has masked underlying weaknesses in the data. As you can see in the table below, while deliveries improved by 6.1% over the third quarter of 2012, new sales orders and backlog fell, both of which are tangible leading indicators of future performance.

Metric

3Q13

3Q12

Change

New sales orders

1,736

1,900

(8.6%)

Deliveries

1,825

1,720

6.1%

Backlog

3,039

3,142

(3.3%)

Source: KB Home.

This same trend was evident when PulteGroup (NYSE:PHM) and Beazer Homes (NYSE:BZH) reported their most recent round of earnings. PulteGroup saw its new orders fall in the second quarter by 12% compared to the previous year. And Beazer said that new orders and backlog dropped by 11.2% and 2.6%, respectively, on a year-over-year basis.

KB Home explained its own results by noting the 3% decrease in backlog "primarily reflected a 9% year-over-year decline in the Company's third quarter net orders." And it sought to deflect attention away from the drop in new order volume by focusing investors' attention on new order value, which has benefited greatly from the recent surge in home prices. Measured by dollar value -- again, as opposed to unit volume -- new orders grew by 7% over the year-earlier quarter.

John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.