KB Home Revenues Drop 20% Amid Persistent Mortgage Rate Pressure

Executive Chairman Jeffrey Mezger noted that market conditions have weakened since the company’s June earnings report, forcing a strategic shift toward balancing pricing and sales pace. Despite the downturn, KB Home successfully transitioned to a predominantly Built to Order business model, with these homes accounting for nearly three-quarters of recent deliveries. This shift contributed to a sequential improvement in housing gross profit margins, which stood at 16.5% for the quarter, compared to 18.2% in the same period last year.

The company’s homebuilding operating income fell to $67.1 million from $131.2 million, impacted by lower margins and reduced operating leverage. Net orders for the quarter slipped 12% to 2,604, though the company saw a modest 2% increase in its ending backlog, which reached 4,398 homes valued at $2.05 billion. Looking ahead, management maintains its full-year guidance, projecting deliveries between 10,500 and 11,000 homes. KB Home continues to prioritize shareholder returns, repurchasing $50 million of common stock during the third quarter and retaining $725 million under its current authorization.