In a market characterized by hesitant consumers and affordability concerns, KB Home remains committed to returning to a 70% built-to-order home share. The builder is also focused on transparent pricing rather than financing incentives to meet the market. In the fiscal fourth quarter, the share of built-to-order homes delivered by KB Home was 57%.
“While we always have some inventory homes available for those buyers that need a quicker move-in date, the superior margins we generate on built-to-order homes will allow us to realize greater value from our communities,” Rob McGibney, president and chief operating officer, said during the builder’s fourth quarter earnings call. “As we remain focused on selling our built-to-order homes and these sales become deliveries over the course of fiscal 2026, we expect to achieve a favorable trajectory in our gross margins. We are aligning our starts with our built-to-order sales and started 1,827 homes in our fourth quarter.”
In the fourth quarter, homes delivered decreased 9% year over year to 3,619 with an average sales price of $465,000. For the full fiscal year, deliveries declined 9% to 12,902 on an average sales price of $481,400. Net orders in the quarter declined 10% to 2,414 as KB Home’s backlog contracted to 3,128 homes from 4,434 at the end of 2024.
“Consumers are demonstrating their interest in buying a home reflected in our website visits, leads, and traffic to our communities,” said chairman and CEO Jeffrey Mezger. “They’re just taking much longer to make their home buying decisions. We were disciplined in not taking overly aggressive steps to capture sales during the seasonally slower fourth quarter. By doing so, we believe we are positioned to achieve better margins on these sales in our 2026 first quarter than we would otherwise have produced.”
Revenue in the fourth quarter declined to $1.69 billion, down from $2 billion from the fourth quarter of 2024. Full-year fiscal revenue declined to $6.24 billion from $6.93 billion fiscal 2024. KB Home generated a fourth quarter profit of $101.5 million, or $1.55 per share, down from a profit of $190.6 million, or $2.52 per share, in the same period a year ago. For the full year, the builder generated a profit of $428.8 million, compared to $655 million in 2024. Full year profit per share declined 27% to $6.15.
McGibney said the builder’s focus on fundamentals, improvement in cycle times, and sales focus will help KB Home achieve its delivery targets in 2026.
“Our beginning backlog represents 27% of the midpoint of our full year delivery target, compared to 34% at the start of 2025,” McGibney said. “While this is a smaller starting position, it must be viewed in the context of our significantly faster build times and our expectation of expanding our community count with new community openings. We have become more efficient in building homes with build times improving roughly 20% year over year in the fourth quarter.”
