KB Home reported third-quarter revenue of $1.30 billion, down 20% from a year earlier, as the homebuilder delivered 2,732 homes, 19% fewer than in the same quarter of 2025. The company posted diluted earnings of $1.05 a share, down from $1.61, and net income of $65.3 million, down from $109.8 million, for the quarter ended August 31. Executive Chairman Jeffrey Mezger said in the September 22 release that “higher mortgage interest rates have further pressured affordability” and made prospective buyers more cautious.
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The Numbers Behind KB Home’s Decline
KB Home’s third-quarter results, released September 22, showed revenue falling to $1.30 billion from a year earlier, a 20% drop tied directly to fewer homes closing. The company delivered 2,732 homes in the quarter, down 19%, at an average selling price of $473,000, down slightly from $475,700 in the same period of 2025, according to the release. Diluted earnings per share fell to $1.05 from $1.61, and net income dropped to $65.3 million from $109.8 million.
Prices Held Nearly Flat While Volume Fell
KB Home’s average selling price slipped only slightly, to $473,000 from $475,700, a decline of less than 1%, even as revenue fell 20% and deliveries fell 19%, per the same results release. The near-flat pricing shows the revenue decline was driven almost entirely by fewer homes changing hands rather than by the company cutting prices to move inventory. Holding price while volume drops is also consistent with a Built-to-Order model, in which a home isn’t started until a buyer has already signed a contract, limiting the finished, unsold inventory that typically pressures builders into discounting.
What Mezger Says Is Driving The Slowdown
Jeffrey Mezger, KB Home’s executive chairman, said in the release that “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.” Mezger’s comment lands the same week the Mortgage Bankers Association put the 30-year fixed rate at 7.1% for the week ending September 25, the highest reading the trade group has recorded since 2024, according to its chart of the week, attaching a specific number to his description of “higher mortgage interest rates.” That statement ties the company’s results directly to the mortgage-rate environment rather than to company-specific missteps, framing the revenue decline as a demand problem shared across the new-home market rather than one unique to KB Home.
Orders Fell, But The Cancellation Rate Barely Moved
Net orders for the quarter came in at 2,604, down 12% from a year earlier, while the cancellation rate ticked up only slightly, to 18% from 17%, according to the results release. The relatively small change in cancellations suggests that buyers who commit to a KB Home contract are largely following through, even as fewer new buyers are entering contracts in the first place, a pattern consistent with Mezger’s description of caution rather than buyer’s remorse driving the numbers.
Net orders are the clearer forward-looking signal in KB Home’s report, since a delivery reflects a contract signed months earlier while an order reflects what a buyer is willing to commit to today, at today’s mortgage rates. The 12% order decline is smaller than the 19% and 20% drops in deliveries and revenue, which suggests the pace of the slowdown may be leveling off rather than accelerating, though a single quarter of order data is not enough on its own to confirm a turning point. Mezger’s comments in the release frame the order softness as a function of buyer caution tied to rates and broader uncertainty, not a structural shift away from homeownership.
The Backlog Tells A Different Story
Even as current-quarter deliveries fell, KB Home’s backlog of homes under contract but not yet delivered grew to 4,398 homes valued at $2.05 billion, up 2% in units and 3% in value from a year earlier. Robert McGibney, the company’s president and chief executive, pointed to KB Home’s shift toward predominantly Built-to-Order construction, with those homes making up nearly 75% of the quarter’s deliveries, a model that ties construction more closely to confirmed buyer commitments rather than speculative building. A growing backlog built mostly from Built-to-Order contracts also means the company is starting fewer homes without a buyer already attached, which limits the finished, unsold inventory that can otherwise pressure a builder into cutting prices to move completed homes.
What A Builder’s Quarter Means For A Household Budget
KB Home’s results describe a builder’s income statement, but the mortgage-rate pressure Mezger cited affects buyers and current owners differently. A prospective buyer facing a higher rate can walk away from a purchase, as KB Home’s own order numbers show many are doing; a household that already owns a home instead absorbs the same rate environment through costs that don’t show up in a builder’s earnings report, property taxes, insurance premiums and the maintenance bills that arrive whether or not the housing market is expanding. KB Home’s 4,398-home backlog, still growing even as this quarter’s deliveries fell, is itself a sign that some buyers are locking in a purchase now rather than waiting for rates to fall further, a bet that today’s higher-rate financing environment is closer to a new normal than a temporary spike. Whether that bet pays off has no bearing on the separate math facing an existing homeowner, whose annual costs are set by a tax assessor and an insurer rather than by a builder’s order book.
The Household Side Of A Builder’s Affordability Problem
KB Home’s own numbers describe an affordability problem severe enough to cut its quarterly revenue by a fifth, with its executive chairman naming higher mortgage rates as the direct cause. The same rate pressure that keeps a prospective buyer out of a new KB Home contract keeps pushing up the ongoing costs, property taxes, insurance, repairs, that a household already owning a home has to manage regardless of what the new-construction market is doing.
The Senior Property Tax & Home-Cost Relief Kit walks through the circuit-breaker credit that includes renters, five ways to reduce a property-tax bill, and worksheets for tracking heating, cooling and home-repair costs.
Look up the relief programs that apply to an existing home in The Senior Property Tax & Home-Cost Relief Kit.
This article was produced with AI assistance and checked against the primary sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
