KB Home Falls Short of Earnings Expectations, Stock Drops 5% Due to Weak Guidance

NEW YORK – KB Home reported third quarter earnings that fell short of analyst expectations, causing shares to drop by 5% in after-hours trading on Wednesday. The homebuilder also issued weaker-than-anticipated guidance.

The Los Angeles-based company announced earnings per share of $2.04, which was below the consensus estimate of $2.06. Revenue for the quarter reached $1.75 billion, slightly exceeding expectations of $1.73 billion.

During the quarter, KB Home delivered 3,631 homes, reflecting an 8% increase year-over-year. The average selling price of these homes rose by 3% to $480,900.

Despite these positive figures, the company’s outlook disappointed investors. KB Home estimates full-year housing revenues to be between $6.85 billion and $6.95 billion, which is below analyst projections of $7.01 billion. Additionally, the homebuilder expects its homebuilding operating income margin to be between 11.1% and 11.2%, less than the 11.5% analysts had forecasted.

CEO Jeffrey Mezger commented on the variability in demand throughout the quarter, noting a decline in late June through July as potential buyers took time to reassess due to high mortgage interest rates and mounting economic concerns.

The backlog of homes under contract for KB Home decreased to 5,724 units valued at $2.92 billion, down from the previous year’s figures of 7,008 homes worth $3.40 billion.