KB Home Q3 revenue target $1.2B-$1.35B, gross margin 16%-16.6%

KB Home set its fiscal third-quarter housing revenue between $1.2 billion and $1.35 billion, with gross margin expected to land between 16% and 16.6%, the builder said in its second-quarter earnings release. The guidance reflects a shift toward a built-to-order model that has reshaped how the company manages inventory and sees demand.

Over the past two years, KB Home has moved away from speculative construction. It now starts houses only after securing a buyer deposit. That frees up capital but extends the time from order to delivery. The backlog, which stood at roughly $2.1 billion entering Q3, gives management a clear line of sight on deliveries through early 2027.

The margin guidance represents a step down from the 17.2% gross margin the company posted in the year-ago period. Management cited higher lumber costs and labor tightness in the West and Southwest, along with price incentives needed to move homes during the 2025 rate spike. The company expects those pressures to ease in the second half, though any further rate increase could delay the recovery.

Risks to the outlook include a repeat of the mortgage-rate volatility that slowed orders in mid-2025. KB Home's concentration in California and Texas leaves it exposed to local regulatory and insurance costs. The company noted that it has kept land spending disciplined, avoiding the heavy lot accumulation that sank competitors in previous downturns.

KB Home's next quarterly update is due in late September, when the market will see whether the built-to-order model's promise of stability holds into the critical spring selling season for 2027.