KB Home Tops Profit Estimates But Flags Slowing Demand
Revenue came in just under forecasts and fourth quarter guidance points to a narrower profit margin
Published
KB Home reported third quarter earnings of $1.05 a share, beating analyst estimates by $0.15. Revenue came in at $1.30 billion, just under the $1.31 billion expected.
Executive Chairman Jeffrey Mezger said housing market conditions weakened since the company's June report, as higher mortgage rates pressured affordability and made buyers more cautious.
For the fourth quarter, KB Home guided to 3,000 to 3,500 home deliveries and housing revenue of $1.45 billion to $1.65 billion, with a gross profit margin of 16.0% to 16.6%, excluding inventory charges. That margin range sits below the third quarter print. For the full year, the company expects 10,500 to 11,000 deliveries, revenue of $4.90 billion to $5.10 billion, and a gross margin of 16.0% to 16.2%.
The company repurchased $50.0 million of stock in the quarter, bringing nine month buybacks to $175.0 million, with $725.0 million left under its current authorization as of August 31, 2026. Fitch has downgraded its 2026 outlook for homebuilders to deteriorating, citing mortgage rates hovering near 6.5% rather than the 6% many had hoped for. Taken together, the earnings beat is real, but the softer revenue and narrower margin guidance suggest the pressure on builders is coming from the broader rate environment rather than from KB Home specifically.