KB Home Q3 Earnings Beat Estimates Despite 20% Revenue Drop as Housing Market Weakens

KB Home posted a third-quarter earnings beat on both the top and bottom lines, though its results reflected a sharply softer housing market compared with a year ago. The homebuilder reported revenue of $1.3 billion, down 20% year over year, while earnings per share came in at $1.05, topping the consensus estimate of $0.88 by nearly 20% but still down 35% from the prior-year period. Homes delivered fell 19% year over year to 2,732, and net orders dropped 12% to 2,604. Housing gross profit margin slipped 170 basis points to 16.5%, with the adjusted figure down 210 basis points to 16.8%.

Management acknowledged conditions have deteriorated since the company's June earnings report, citing higher mortgage interest rates as a further drag on affordability. Despite that backdrop, KB Home affirmed its full-year 2026 guidance, calling for 10,500 to 11,000 home deliveries, housing revenues of $4.90 billion to $5.10 billion, and a housing gross profit margin of 16.0% to 16.2%. The company's backlog value rose 3% year over year to $2.1 billion, a sign that its built-to-order model continues to provide some revenue visibility.

For the fourth quarter, KB Home guided for 3,000 to 3,500 deliveries and housing revenues of $1.45 billion to $1.65 billion, with a gross profit margin of 16.0% to 16.6% and an ending community count of 270 to 275. The company's shares rose roughly 3% following the report, as investors focused on the earnings beat and the maintained full-year outlook rather than the year-over-year declines.