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KB Home residential development
Photo: Parameter

KB Home Stock Slides 2% on Q4 Margin Guidance Miss

PR Newswire / KB Home2 min read5 sources

Why is KB Home stock down today?

KB Home (KBH) stock fell 2% after hours on Tuesday after the homebuilder guided Q4 gross margin to 16.0–16.6%, missing the 17.2% analyst target, despite EPS of $1.05 topping the $0.90 estimate.

Key numbers

Q3 Diluted EPS$1.05+17% vs $0.90 consensus estimate
Q3 Housing Revenue$1.30B-20% vs prior year Q3
Q4 Gross Margin Guidance16.0–16.6%-0.9pp vs 17.2% analyst target
Q3 Homes Delivered2,732-19% vs prior year Q3
Ending Backlog4,398 homes+2% YoY — first year-over-year rise in four years
Monthly Orders per Community3.1down from 3.8 a year ago

What happened

KB Home (KBH) stock fell 2% after hours on Tuesday after the homebuilder guided Q4 gross margin to 16.0–16.6%, missing the 17.2% analyst target, despite EPS of $1.05 topping the $0.90 estimate. The company delivered 2,732 homes in its fiscal third quarter ending August 31, down 19% from a year earlier, with housing revenue falling 20% to $1.30 billion. Executive Chairman Jeffrey Mezger said the housing market had been weakening since June, with mortgage rates squeezing buyers out of the market and resale inventory climbing to its highest level in a decade. Full-year revenue guidance was tightened to $4.90B–$5.10B, with annual gross margin now projected at 16.0%–16.2%.

Why it matters

KB Home's warning signals a broader challenge: rising interest rates are making mortgages too expensive for many would-be buyers, pushing down sales and squeezing builder margins. Gross margins — the gap between building costs and selling price — have dropped from 18.2% a year ago to 16.5% now. If rate hikes continue, the slowdown could reduce construction activity and jobs across the economy.

Who this affects

Marketbearish
Medium impact
Homebuilder stocks broadly fell on worsening housing affordability concerns.
Companybearish
Medium impact
KB Home shareholders face weaker earnings on margin guidance cut.
Competitorsbearish
Low impact
Rival homebuilders fell with KBH on shared affordability concerns.
Industrybearish
Medium impact
Rate-driven affordability pressure threatens new-home sales and margins sector-wide.

KB Home vs D.R. Horton, Lennar, PulteGroup

KB HomeKBH$2.97B-0.31%—13.75x
D.R. HortonDHI$39.65B-1.62%—12.82x
LennarLEN$19.76B-1.23%-40.1%17.50x
PulteGroupPHM$22.48B-1.95%—11.55x

As of 2026-09-23

How we got here

  1. Q2 2026 earnings call; Mezger flags weakening housing conditions and rising resale competition.

  2. KB Home reports Q3 after market close; EPS $1.05 beats $0.90 estimate, revenue $1.30B.

  3. KBH falls 2% after hours as Q4 margin guidance of 16.0–16.6% misses 17.2% target.

  4. Multiple analysts cut price targets; KBH recovers partially, trading near flat Wednesday.

What to watch

  • Fed rate decisions — further hikes would worsen housing affordability and builder margins.Q4 2026
  • Q4 FY2026 KB Home earnings — whether margins hold at 16% guidance floor.Q1 2027
  • Southern California market — cited as primary drag pulling Q4 gross margin below prior guidance.Q4 2026

Educational content only. Not investment advice.

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