KB Home is missing out on the biggest rally in homebuilder bonds in more than two years as rising prices and the loss of MetLife Inc. as its financing partner stymie potential sales at its housing developments.

Credit-default swap traders are now betting that it's more likely than not the Los Angeles-based homebuilder will fail over the next five years. The company's implied default odds jumped to 52 percent, up from 41 percent a month ago, after KB Home struggled to close deals in its first quarter, when 36 percent of transactions fell through, compared with the industry average of 23 percent, according to debt researcher Gimme Credit LLC.

KB Home's developments languished as Lennar Corp. and Hovnanian Enterprises Inc. saw sales rise, helping homebuilder bonds gain 9.5 percent in the quarter, the most since 2009. Jeffrey Mezger, the company's chief executive officer, is avoiding the use of price cuts to increase volume even after MetLife's January exit from the home-loan business.