KB Home earns $1.05 a share as revenue falls 20%, and trims its full-year margin range to 16.0%-16.2%

KB Home reported third-quarter earnings of $1.05 a diluted share on Tuesday, down from $1.61 a year earlier, as revenue fell 20% to $1.30 billion and deliveries dropped 19% to 2,732 homes, according to the company's earnings release filed with the SEC. Investing.com reported the result beat analyst estimates by 16 cents, with revenue in line. The quarter ended August 31.

The shares closed at $48.59, up 1.5%, before the report, and traded around $49.70 after hours, according to Nasdaq data.

Executive Chairman Jeffrey Mezger said housing conditions have been "weakening since our June earnings report," with higher mortgage rates hurting affordability and buyers turning "more cautious."

What "within the ranges" actually means

The release says KB Home still expects full-year deliveries, housing revenue and margins to land within the ranges it last gave. That is true. But the new guidance is not the same as the old. We compared it line by line with the June release:

The top of the revenue range came down by $200 million and the margin range slid to its bottom end, with the new high of 16.2% below the old midpoint of 16.3%. That is the cut the WSJ's headline refers to. Nothing was reset below the June floor, which is why the company can describe it the way it does.

The demand numbers moved more than the profit numbers

Earnings came in ahead of expectations partly because the quarter's housing gross margin, excluding charges, was 16.8%, above the 16.0% to 16.6% KB Home guided to in June. It credits a shift back to homes built to order, which made up nearly three-quarters of deliveries. The order book tells a softer story:

• Cancellations were 18% of gross orders, up from 12% in the second quarter and 17% a year ago.
• Monthly orders per community fell to 3.1, from 4.0 last quarter and 3.8 a year earlier. Net orders fell 12% to 2,604.
• Backlog rose 2% from a year ago to 4,398 homes, the first annual increase in four years, the company said. Against the 4,526 homes it had in June, it is down.

The year-over-year backlog gain is the line the release leads with. The drop since June is the one that shows how the summer went.

What it means per house

The average selling price barely moved, at $473,000 versus $475,700 a year ago. The margin is what gave. Our arithmetic: a 16.8% housing gross margin on a $473,000 home is about $79,500 of gross profit. The year-earlier 18.9% on $475,700 was about $89,900. That is roughly $10,400 less per home, and the company attributes it to pricing pressure, higher land costs and less operating leverage. For buyers, that is where the incentives and price cuts show up. For investors, it is why earnings per share fell 35% on a 20% revenue decline.

Borrowing also rose. KB Home had $415 million drawn on its revolving credit line at quarter end and its debt-to-capital ratio climbed to 35.7% from 30.3% in November, while it bought back $50 million of stock in the quarter and still has $725 million authorized.

The results land on the same day Berkshire Hathaway disclosed a larger stake in rival Lennar. Read our Berkshire and Lennar story, and see Redfin's August price data and the 10-year Treasury chart for the rate backdrop.

Sources: KB Home Q3 and Q2 2026 earnings releases (SEC Form 8-K); Nasdaq; Investing.com; WSJ. Per-home figures are our calculations from company data. This is market information, not investment advice.