KB Home Lowers Full-Year Housing Gross Profit Margin Guidance; Shares Down Pre-Bell

07:39 AM EDT, 09/23/2026 (MT Newswires) -- KB Home (KBH) shares were down early Wednesday as the homebuilder lowered its full-year housing gross profit margin estimates amid weaker market conditions and affordability pressures. The company now expects fiscal 2026 housing gross profit margin between 16% and 16.2%, assuming no inventory-related charges, it said late Tuesday. KB Home previously guided the metric in a range of 16.1% to 16.5%. Its shares were down 2.7% in premarket activity Wednesday and have lost nearly 14% in value so far this year. For the fourth quarter, the homebuilder anticipates housing gross profit margin of 16% to 16.6%. The outlook is about one percentage point lower than the company's previous guidance due to market pressures and higher direct and land costs, Chief Executive Robert McGibney said during its fiscal third-quarter earnings call late Tuesday, according to a FactSet transcript. "When we provided margin guidance on our last call, our outlook for the fourth quarter was more favorable than it is today," Chief Accounting Officer William Hollinger said on the Tuesday call. "We now anticipate housing gross margin to be down on a sequential basis in the fourth quarter." Softening housing market conditions and greater affordability challenges have contributed to rising price pressures across many of the markets that KB Home operates in, creating additional headwinds to margins, according to Hollinger. The company now expects housing revenue between $4.90 billion and $5.10 billion for the ongoing fiscal year, reflecting a lower top end versus the previous guidance of $5.30 billion. It continues to project delivering between 10,500 and 11,000 homes in the year, while the current FactSet consensus is 10,739 units. "We are operating in a housing market that continues to be challenging, with conditions weakening since our June earnings report," KB Home Executive Chairman Jeffrey Mezger said in an earnings release. "Higher mortgage interest rates have further pressured affordability and, together with geopolitical uncertainty and broader economic headwinds, have caused many prospective buyers to be more cautious on purchasing a home." For the three months through August, the company's net income fell to $1.05 a share from $1.61 a year earlier, but topped Wall Street's view for $0.89. Consolidated revenue dropped 20% to $1.3 billion, in line with the average analyst estimate. It delivered 2,732 homes during the quarter, down 19% year over year. The average selling price decreased to $473,000 from $475,700, while net orders slipped 12% to 2,604 homes. For the current quarter, KB Home forecasts housing revenue of $1.45 billion to $1.65 billion, with expected deliveries of 3,000 to 3,500 homes. Truist Securities expects the company's fourth-quarter deliveries to come in at the lower end of the projected range due to the work potentially required in selling inventory homes to get to the midpoint of the guidance, the brokerage said in a note to clients. Last week, rival homebuilder Lennar (LEN) reported weaker-than-expected fiscal third-quarter results as affordability challenges slowed home-buying activity. Official data showed that US housing starts declined to a three-month low in August amid a sharp drop in multi-family projects as homebuilders grappled with higher financing and material costs.