KB Home pivots to build-to-order model amid revenue decline

KB Home has reported a strategic shift back toward its build-to-order business model, a move intended to increase margins despite recent revenue and delivery declines. In its Q3 2026 earnings report, the company saw revenue decrease by 20% compared to the previous year, with home deliveries falling 19% to 2,732 units. Operating income also saw a significant decline of nearly 50%.

While the company’s emphasis on build-to-order homes has helped improve margins from 15.2% in the first half of the year to 16.5% in the third quarter, KB Home has lowered its guidance for Q4 sales prices and margins. The West Coast segment, including Washington operations, reported a 23% jump in backlog.

Market conditions remain challenging for homebuyers, particularly first-time purchasers. Factors such as high mortgage rates, inflation, and economic uncertainty continue to impact consumer demand and affordability.