KB Home reported $1.30 billion in revenue for its third quarter ended August 31, 2026, a 20% decline from the corresponding period a year earlier. The Los Angeles-based homebuilder delivered 2,732 homes, down 19%, as elevated mortgage rates and housing affordability challenges continued to affect buyer demand. Despite the difficult market, KB Home maintained its full-year guidance and repurchased $50 million of common stock during the quarter.
Quarterly net income declined to $65.3 million from $109.8 million, while diluted earnings per share decreased to $1.05 from $1.61.
The average selling price of homes delivered was $473,000, compared with $475,700 in the prior-year quarter.
Homebuilding operating income fell to $67.1 million from $131.2 million, with the operating income margin declining to 5.2% from 8.1%.
The housing gross profit margin was 16.5%, compared with 18.2% a year earlier. Excluding inventory-related charges, the margin was 16.8%, compared with 18.9%.
KB Home attributed the margin pressure primarily to continued home pricing challenges, higher relative land costs, and reduced operating leverage associated with lower delivery volumes.
Nevertheless, the company reported sequential improvement in its financial performance, supported partly by progress toward its preferred build-to-order business model.
Build-to-order homes represented nearly 75% of third-quarter deliveries, reflecting the company’s efforts to reduce its reliance on speculative construction and better align production with customer demand.
KB Home also expanded its community footprint, with its average community count increasing 8% to 279. The company ended the quarter with 277 communities, an increase of 5% year over year.
Net orders declined 12% to 2,604 homes, while monthly net orders per community decreased to 3.1 from 3.8.
Despite lower orders, the company’s backlog increased for the first time in four years. The number of homes in backlog rose 2% to 4,398, while backlog value increased 3% to $2.05 billion.
For the first nine months of fiscal 2026, KB Home generated $3.49 billion in revenue, compared with $4.54 billion a year earlier. It delivered 7,497 homes and reported $126.1 million in net income, compared with $327.3 million during the prior-year period.
KB Home ended August with $942.4 million in liquidity, comprising $159 million in cash and cash equivalents and $783.4 million in available revolving credit capacity.
The company repurchased approximately 900,000 shares for $50 million during the third quarter, bringing its year-to-date repurchases to 3.1 million shares for $175 million. It had $725 million remaining under its share repurchase authorization.
For the fourth quarter, KB Home expects to deliver 3,000 to 3,500 homes and generate $1.45 billion to $1.65 billion in housing revenue.
Its full-year guidance calls for 10,500 to 11,000 home deliveries, housing revenue between $4.9 billion and $5.1 billion, and a housing gross profit margin of 16% to 16.2%, excluding inventory-related charges.
KEY QUOTES:
“We are operating in a housing market that continues to be challenging, with conditions weakening since our June earnings report. Higher mortgage interest rates have further pressured affordability and, together with geopolitical uncertainty and broader economic headwinds, have caused many prospective buyers to be more cautious on purchasing a home. Against this backdrop, we produced third quarter financial results that reflected solid sequential improvement.”
Jeffrey Mezger, Executive Chairman of KB Home
“We also made significant progress and have now achieved our goal of returning to a predominantly Built to Order business, with BTO homes representing nearly three-quarters of our deliveries in the third quarter, which contributed to our sequentially higher housing gross profit margin.”
Robert McGibney, President and CEO of KB Home
