KB Home (KBH) Earnings Date & Reports

Key Takeaways

• KB Home reported total revenues of $1.30 billion for its fiscal third quarter ended August 31, 2026, down 20% from $1.62 billion a year earlier.
• Diluted earnings per share (EPS) came in at $1.05, below the prior-year $1.61 but ahead of the reported consensus estimate.
• Net orders declined 12% year over year to 2,604 homes, yet ending backlog grew for the first time in four years.
• The housing gross profit margin improved sequentially to 16.5% as the Built to Order (BTO) model reached 74% of deliveries.
• Management reaffirmed full-year delivery and revenue guidance while moderating its fourth-quarter average selling price (ASP) and margin outlook.

Earnings Context and Why It Matters

KB Home's fiscal third quarter is a key checkpoint for investors tracking the U.S. housing market's trajectory through 2026. The homebuilder operates across roughly 50 markets, giving its results broad read-through on affordability, mortgage rates, and consumer confidence. Coming into the report, the company had been navigating a slowdown in deliveries and revenue, while leaning into its shift back to a predominantly Built to Order model. Because KB Home's fiscal year ends in November, this quarter also provides an early signal on how the company is positioned entering its seasonally important final stretch. The results matter for gauging whether cost discipline and backlog growth can offset softer demand.

Reported Results

KB Home reported total revenues of $1.30 billion for the fiscal third quarter ended August 31, 2026, a 20% decline from $1.62 billion in the prior-year period. Homes delivered fell 19% to 2,732, while the average selling price held relatively steady at $473,000, compared with $475,700 a year earlier.

Net income was $65.3 million, down from $109.8 million, producing diluted EPS of $1.05 versus $1.61 in the same quarter last year. The result exceeded the reported consensus EPS estimate, while revenue was broadly in line with expectations. The housing gross profit margin was 16.5%, down from 18.2% a year ago but up sequentially from the second quarter, reflecting continued pricing pressure and higher relative land costs, partially offset by the growing Built to Order mix.

Net orders decreased 12% to 2,604 homes. Notably, ending backlog increased for the first time in four years, rising 2% to 4,398 homes, with backlog value up 3% to $2.05 billion. The average community count grew 8% to 279.

On guidance, management issued fourth-quarter targets for deliveries of 3,000 to 3,500 homes and housing revenues of $1.45 billion to $1.65 billion, while moderating its projected ASP to roughly $480,000 at the midpoint of guidance.

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Market Reaction and Investor Sentiment

Heading into the report, sentiment around homebuilders had been cautious, with higher mortgage rates and softer affordability weighing on buyer traffic. KB Home's third-quarter print landed as a mixed signal for investors: EPS came in above consensus, and the first backlog increase in four years offered a constructive read on future revenue visibility, but the year-over-year declines in orders, deliveries, and revenue underscored persistent demand headwinds.

Management's decision to lower its fourth-quarter ASP outlook to roughly $480,000, down from the approximately $500,000 implied by prior guidance, reflected slower-than-expected sales in Southern California. That moderation, combined with guidance for a lower fourth-quarter gross margin, reinforced the cautious tone around the near-term outlook even as the Built to Order shift supported sequential margin improvement.

Forward Outlook and Key Factors to Monitor

Looking ahead, KB Home's fiscal fourth quarter will be defined by its ability to convert a growing backlog into deliveries while protecting margins. Management reaffirmed full-year targets for deliveries of 10,500 to 11,000 homes and housing revenues of $4.90 billion to $5.10 billion, but the reduced fourth-quarter ASP and gross margin guidance signals that near-term profitability remains under pressure.

Investors should monitor several factors. First, the pace of new community openings matters, as management expects roughly 115 new communities to open during fiscal 2026, supporting sales momentum and the Built to Order mix. Second, direct construction costs bear watching, given rising pressure from fuel, general inflation, and tariffs that management flagged for fourth-quarter deliveries.

Third, the trajectory of net orders and cancellation rates will indicate whether buyer caution is stabilizing. The quarterly cancellation rate rose to 18% from 17% a year earlier, a modest but meaningful signal of affordability strain. Finally, balance sheet and capital allocation remain in focus, with KB Home holding $942.4 million in total liquidity and continuing its share repurchase program and dividend. These factors will shape how the company enters fiscal 2027.

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