CHICAGO (Reuters) - KB Home (KBH.N) posted a quarterly loss of nearly $773 million on Tuesday with abandonment and impairment charges as the U.S. housing market continued to decline, and said it expects another tough year for the industry in 2008.

KB Home, whose shares fell 5 percent in pre-market trade, also said it expects to reach an agreement with bank partners to amend its credit facility covenants by the end of the first quarter of 2008.

The No. 5 U.S. home builder reported a net loss of $9.99 per share for the fourth quarter ended November 30, compared with a year-earlier loss of 64 cents per share, or $49.6 million.

The company recorded an after-tax noncash charge of $514.2 million to establish a valuation allowance related to deferred tax assets. It also recorded $305.5 million in charges for inventory impairments, land option contract abandonments and impairments on future land sales.

Excluding the valuation allowance for deferred tax assets, KB Home reported a loss of $3.34 per share in the quarter, while analysts expected a loss of $1.34 per share, according to Reuters Estimates.

Revenue fell to $2.07 billion in the quarter, from $3.01 billion a year earlier mainly due to a drop in housing revenue in all of its regions, KB Home said.

The U.S. housing market has been in a tailspin for more than two years, hounded by falling prices and evaporating demand. Sales of U.S. single-family homes in November dropped 9 percent and fell to its lowest rate since 1995, according to the U.S. Commerce Department's most recent report.

In response, U.S. home builders have switched their focus from profit and growth to survival and have bolstered their balance sheets and credit quality in order to do so.

New home deliveries fell 22 percent to 8,132 in the quarter from a year earlier and the average selling price fell 11.5 percent to $247,800, KB Home said.

KB, based in Los Angeles, ended the quarter with no borrowings outstanding on its $1.5 billion bank revolving credit and $1.33 billion in cash, more than $300 million above its prior forecasts.

KB Home shares were trading at $17.56 before the bell after closing at $18.48 Monday on the New York Stock Exchange.

(Reporting by David Bailey and Ilaina Jonas, editing by Dave Zimmerman)