KB Home (KBH) Q3 2026 earnings summary

Executive summary

• Q3 2026 revenues were $1.3 billion, with diluted EPS of $1.05 and net income of $65.3 million, reflecting sequential improvement but a 20% year-over-year decline amid a challenging housing market with higher mortgage rates and economic headwinds.

• The built-to-order (BTO) model now comprises nearly 75% of deliveries, supporting margin improvement and lower inventory risk.

• Book value per share increased to $62.56, and capital returns to shareholders exceeded $65 million in Q3 through buybacks and dividends.

• Market headwinds included rising mortgage rates, persistent inflation, increased resale inventory, and declining consumer confidence, leading to softer demand and pricing pressures.

• Community count grew year-over-year, supporting future sales efforts.

Financial highlights

• Housing revenues declined 20% year-over-year to $1.3 billion, primarily due to a 19% decrease in homes delivered and slightly lower ASP.

• Net income was $65.3 million, down from $110 million a year ago; diluted EPS was $1.05 versus $1.61.

• Homebuilding operating income was $67.1 million (5.2% of revenues), down from $131.2 million (8.1%) year-over-year.

• Housing gross profit margin was 16.5% (16.8% adjusted), down from 18.2% (18.9% adjusted) last year but up sequentially.

• SG&A expense ratio rose to 11.3% from 10% year-over-year, mainly due to lower operating leverage.

Outlook and guidance

• Q4 2026 homes delivered expected between 3,000–3,500; housing revenues projected at $1.45–$1.65 billion; gross margin 16–16.6%; SG&A 10.3–10.9%; effective tax rate ~26%.

• Full-year 2026 guidance: 10,500–11,000 homes delivered, housing revenues of $4.9–$5.1 billion, gross margin 16–16.2%, SG&A 11.5–11.7%, effective tax rate ~23%.

• Q4 gross margin expected at 16–16.6%, about one point lower than prior guidance due to market and cost pressures.

• The company continues to focus on growth through investments in land acquisition and maintaining a strong capital structure.

• Emphasis remains on targeting first-time and first move-up buyers, leveraging demographic trends for long-term opportunity.