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KB Home Reports Q3 2026 Financial Results

On September 22, 2026, KB Home (NYSE: KBH) announced its earnings results for the third quarter ending August 31, 2026. In his statement, Executive Chairman Jeffrey Mezger opened with a note on the prevailing difficulties in the housing market, emphasizing the cooling conditions since the June earnings report associated with rising mortgage interest rates. The increased rates have contributed to reduced affordability, compounded by geopolitical uncertainties and broader economic challenges, leading many prospective buyers to exhibit caution in home purchasing.

Despite these challenges, the company reported solid sequential improvement in its financial performance during the quarter. President and CEO Robert McGibney highlighted a significant achievement in the company's operational model—the goal of returning to a predominantly Built to Order (BTO) business structure. This approach has permitted KB Home to see nearly three-quarters of their deliveries in the quarter being BTO homes, positively impacting the housing gross profit margin. Additionally, the number of new community openings throughout the year has led to a year-over-year increase in community count, helping to support future sales.

Financial Highlights

For the third quarter, KB Home's revenues reached $1.30 billion, a decrease of 20% compared to the same quarter last year. The number of homes delivered was down 19%, totaling 2,732 units, while the average selling price for homes slightly decreased to $473,000.

When analyzing the homebuilding operating income, it dropped significantly to $67.1 million from $131.2 million the previous year, revealing a margin that fell to 5.2% from 8.1%. This decline was attributed to reduced housing gross profits and increased selling, general, and administrative expenses (SG&A). In line with market dynamics, the housing gross profit margin registered at 16.5%, down from 18.2% in the prior year’s quarter.

On the financial services side, the pretax income totaled $7.4 million, marking a decrease from $8.7 million. The overall pretax income decreased from $143.2 million to $81.2 million year-over-year, exhibiting the significant impact of market constraints on profitability.

From a net income perspective, KB Home achieved $65.3 million, down from $109.8 million, leading to a diluted earnings per share of $1.05 compared to $1.61 in the previous year. However, the company’s management addressed shareholder value by repurchasing $50.0 million in common stock this quarter, continuing its commitment to maintaining long-term values for shareholders.

Year-to-Date Performance

For the nine months ending August 31, 2026, the total revenues stood at $3.49 billion—down from $4.54 billion in the previous year—with homes delivered decreasing 19% to 7,497. The net income for this period also reflected a decline to $126.1 million, compared to $327.3 million from last year.

Notably, KB Home experienced an increase in backlog for the first time in four years, finishing the quarter with a total backlog of 4,398 homes, up 2% from the previous year. The increase in backlog value also showed growth, climbing 3% to reach $2.05 billion.

Future Outlook

Looking ahead, KB Home has set guidance for the fourth quarter, anticipating home deliveries between 3,000 and 3,500 homes and housing revenues ranging from $1.45 billion to $1.65 billion. Their housing gross profit margin is expected to be in the range of 16.0% to 16.6%, excluding any inventory-related charges.

KB Home remains focused on balancing price and sales pace to provide optimal returns and is committed to financial practices that could enhance future growth and shareholder returns through ongoing stock repurchase programs and consistent dividend payments.

In summary, despite facing challenging conditions in a fluctuating housing market, KB Home's strategic efforts to adapt and innovate its business model, combined with a focus on sustainability and customer satisfaction, continue to position it as a resilient player in the homebuilding industry. For more information on their financial results and future strategies, the company invites stakeholders to listen to the upcoming conference call scheduled for today at 2:00 PM PT, 5:00 PM ET via their official website.