KB Home’s fiscal third-quarter housing revenue fell 20% year over year to $1.3 billion and deliveries dropped 19% to 2,732, while backlog rose 3% to $2.05 billion. Built-to-Order homes made up 74% of deliveries, but gross margin narrowed to 16.5% from 18.2%.
Built-to-Order homes, whose construction begins after a buyer signs and selects finishes, accounted for 74% of deliveries, up from 60% in the second quarter. Unsold inventory fell to 26% of production from 41% a year earlier, and construction time declined to 99 days from 122; management is targeting 90 days.
Net orders fell 12% year over year and diluted earnings per share declined to $1.05 from $1.61. Management cut its fourth-quarter gross-margin outlook by one percentage point to 16.0%–16.6% and lowered average selling-price guidance by about $20,000 to roughly $480,000, citing weaker Southern California demand and cost pressure from fuel, inflation and tariffs. Executive Chairman Jeff Mezger said resale inventory had reached its highest level in a decade, weakening pricing power.
