In a market where many builders are relying on incentives and quick move-in homes, KB Home remains focused on transparent pricing and returning to a 70% built-to-order home share.
In the fiscal third quarter, this approach helped the builder beat Wall Street projections and meet or exceed guidance ranges across several key operating categories. KB Home reported profit of $109.8 million, or $1.61 per share, in the third quarter. While these results were down 30.2% and 21% on a year-over-year basis, both metrics bested projections from Wall Street.
Jeffrey Mezger, chairman and CEO of KB Home, noted demand and affordability conditions improved throughout the quarter as mortgage interest rates began to ease.
Third Quarter By the Numbers
- Revenue totaled $1.62 billion, down from $1.75 billion in the same period in 2024.
- Home deliveries decreased 7% to 3,393 as average selling price ticked down slightly to $475,700.
- Net orders in the third quarter declined 4% to 2,950. Monthly net orders per community ticked down to 3.8 from 4.1 a year ago while the cancellation rate increased to 17% from 15% in the third quarter of 2025. The number of homes in backlog decreased to 4,333 homes from 5,724 homes a year ago.
- Lots owned or under contract decreased 15% to 65,251, of which 58% were owned. Investments in land and land development decreased 7% to $1.95 billion.
What They’re Saying
“The longer-term outlook for the housing market remains favorable, driven by demographics and the ongoing undersupply of homes…Our focus is on offering the most compelling value at a transparent price while limiting the use of incentives. When we discuss with buyers the alternative of the lower sales price we offer versus a much higher price that can be offset by incentives, buyers recognize that they have a better opportunity for building wealth through equity with our homes that has the lower starting price point.” — Mezger
“Our fourth quarter sales approach will emphasize our built-to-order homes while continuing to sell through our inventory. Our goal is to steer our business back to our historical range of built-to-order homes, which has averaged close to 70% over more than a decade from around 50% currently. It is our core competency and a key competitive differentiator. And with the significant reduction in our build times, that has become a more compelling selling proposition.” – Mezger
“By advertising the true base price on our website, we let buyers know exactly what to expect before they ever visit a community without the need for back-and-forth negotiations to uncover the real deal. It is a clear upfront way of doing business that makes the home buying process easier and more straightforward. As a result, we believe we draw more traffic to our communities than we might otherwise attract if our pricing was dependent on incentives.” — Robert McGibney, president and chief operating officer
