Key facts
- KB Home's Q3 2026 revenue fell 20% year-over-year, with home deliveries down 19% to 2,732.
- The builder's average selling price was $473,000, a slight decrease from $475,700.
- Gross profit margins improved to 16.5% in Q3 2026, up from 15.2% in Q1 and Q2.
- KB Home's build-to-order (BTO) home mix increased to 74% of orders in Q3 2026.
- Average build time for BTO homes decreased by 19% to 99 days in Q3 2026.
- KB Home lowered its Q4 margin and sales price guidance.
KB Home's strategic pivot back to a build-to-order (BTO) model is yielding higher profit margins, though buyer caution due to affordability constraints and economic uncertainty is tempering sales. The company reported a 20% year-over-year decline in revenue and a 19% drop in home deliveries to 2,732 homes in its third quarter of fiscal year 2026. The average selling price was $473,000, a slight decrease from $475,700 a year ago.
Despite the revenue and delivery declines, KB Home's gross profit margin improved to 16.5% in the latest quarter, up from 15.2% in the preceding two quarters and reflecting the higher margins typically associated with BTO homes. The company has successfully increased its BTO mix to 74% of orders, up from about 50% a year prior, and has also reduced the average build time for these homes by 19% to 99 days.
However, KB Home's decision to lower its fourth-quarter margin and sales price guidance overshadowed the quarterly margin improvement, leading to a stock price decline. Executives cited persistent headwinds including rising mortgage rates, inflation, low consumer confidence, and increased competition from the resale market as factors burdening buyer demand. Buyers are reportedly in a wait-and-see mode, hesitant to purchase at what they perceive as peak interest rates.