"While KBH currently has adequate liquidity to fund working capital and debt service, this cushion is likely to erode in the next 12-18 months as the company continues to have operating losses, expends cash to replenish its land supply and pays about $226 million to satisfy its South Edge obligations," Fitch said. At May 31, KB Home had unrestricted cash of $621.3 million. It expects the homebuilder to end fiscal 2011 with unrestricted cash of between $340 million to $370 million. Publicly traded homebuilders were generally unprofitable in the first and second quarters and revenue trailed year-ago levels. Fitch projects new single-family housing starts will drop 13.1% in 2011 following 5.8% growth in 2010. After falling 14.1% in 2010, new home sales are forecast to decrease about 7% in 2011.