KB Home (NYSE: KBH) is having a rough Friday. Shares fell sharply on December 19, 2025, even though the homebuilder posted a Q4 earnings and revenue beat the night before. The market’s message was blunt: the quarter looked fine, but the 2026 outlook—especially gross margin guidance—looked uncomfortable.
As of the latest available market update, KBH was trading around $56.87, down about 9% on the day, after opening lower and selling off through the session.
Below is a roundup of the major KB Home stock news, forecasts, and analyses published on 19.12.2025, plus the key numbers behind the move.
Why KB Home stock is down today
The selloff is less about what KB Home reported for Q4 and more about what it projected for early fiscal 2026.
In its earnings release, KB Home guided first-quarter 2026 housing gross profit margin to 15.4%–16.0% (assuming no inventory-related charges). That range is meaningfully below where the company has been running and became the focal point of the day’s analyst notes and trader chatter. [1]
At the same time, KB Home ended the quarter with a sharply smaller backlog (a forward-looking indicator for deliveries and revenue), and analysts broadly interpreted the guidance as a signal that incentives, pricing pressure, and/or mix may remain heavy into the next selling season. [2]
KB Home Q4 2025 earnings: beats estimates, but year-over-year declines stack up
KB Home’s fiscal fourth quarter ended November 30, 2025, and the headline numbers show a company still operating in a “higher-rate, tougher affordability” world.
Q4 results (year over year):
- Revenue:$1.69 billion, down from $2.00 billion
- Diluted EPS:$1.55, down from $2.52
- Adjusted diluted EPS:$1.92 (excluding certain charges)
- Homes delivered:3,619 (down 9%)
- Average selling price:$465,600 (down 7%) [3]
Profitability compressed, too:
- Housing gross profit margin:17.0%, down from 20.9%
- Adjusted housing gross profit margin:17.8% (excluding inventory-related charges) [4]
KB Home attributed margin pressure to familiar villains: price reductions, higher relative land costs, and geographic mix. [5]
That mix—beating the quarter but showing pressure under the hood—is why several market writeups framed the report as “mixed” despite the headline beat. [6]
The forward indicators: orders and backlog stayed soft
For homebuilders, backlog is the monster under the bed—you don’t see it in today’s revenue, but it can move tomorrow’s.
KB Home reported:
- Net orders:2,414 in Q4 (down 10%)
- Ending backlog:3,128 homes, down from 4,434
- Backlog value:$1.40 billion, down from $2.24 billion
- Cancellation rate:18% (vs. 17% a year ago)
- Ending community count:271 (up 5%) [7]
Several same-day analyses pointed to backlog weakness as a key reason the stock dropped despite the beat: the market is paying up for visibility right now, and backlog is visibility. [8]
2026 guidance: the margin story is the story
KB Home’s official guidance set the tone for December 19 coverage.
Q1 2026 guidance (KB Home)
- Deliveries: 2,300–2,500 homes
- Housing revenue:$1.05B–$1.15B
- Housing gross profit margin:15.4%–16.0%
- SG&A as % of revenues: 12.2%–12.8%
- Effective tax rate: ~19%
- Share repurchases: $50M–$100M [9]
Full-year 2026 guidance (KB Home)
- Deliveries:11,000–12,500
- Housing revenue:$5.10B–$6.10B
- Effective tax rate: 24%–26% [10]
Analysts zeroed in on the sub-16% Q1 margin guide as a sector signal, not just a KB Home signal—especially given that other builders have also been navigating incentives and affordability math. [11]
Analyst forecasts and price targets on Dec. 19: cuts come in, but the range is wide
A big part of “today’s” KB Home story is Wall Street re-rating the next 12–24 months.
RBC: “Sector Perform,” target cut to $54
RBC Capital lowered its price target to $54 (from $59) while maintaining a Sector Perform rating, citing weak guidance—particularly on gross margin—and near-term demand challenges. RBC also cut its FY2026 EPS estimate (notably), while arguing valuation near tangible book could help limit downside. [12]
Wolfe: target cut to $56, “Underperform”
Wolfe Research lowered its target to $56 (from $63) and reiterated an Underperform stance. Wolfe’s note emphasized misses on orders/margins versus expectations and flagged that multiple builders are guiding to weaker early-2026 gross margins, likely reflecting incentive-driven competition and mix effects. [13]
UBS: still “Buy,” but target trimmed to $77
UBS lowered its price target to $77 (from $83) but kept a Buy rating, arguing for upside if the housing setup improves. UBS also revised its adjusted EPS estimates for fiscal 2026–2028 downward after the outlook update, while pointing to improving mix (build-to-order), community growth, and an easing-rate narrative as potential tailwinds. [14]
Where the consensus sits now
Across widely cited consensus trackers, KB Home remains a “Hold” on average, with targets clustering in the low-to-mid $60s—but with a meaningful spread between bearish and bullish camps. [15]
That dispersion is the market telling you something important: investors are not debating whether KB Home can build houses. They’re debating where margins stabilize if mortgage rates stay elevated and incentives remain the cost of doing business.
Capital returns and balance sheet: buybacks remain a pillar of the KBH story
One reason KB Home stays on value screens (and keeps popping up in “undervalued homebuilder” discussions) is its capital return profile.
From the earnings release:
- KB Home repurchased $100 million of stock in Q4 (about 1.6 million shares)
- Total FY2025 repurchases: ~$538.5 million
- Remaining authorization: $900 million under the current program [16]
On financial flexibility, KB Home also highlighted an upsized $1.20B revolving credit facility and an extended term loan maturity, with total liquidity of about $1.43B at fiscal year-end (including cash and revolver capacity). [17]
For investors, that matters because homebuilding is cyclical: the balance sheet is the shock absorber.
Market sentiment check: bearish options activity spikes as the stock breaks lower
While fundamental analysts were rewriting models, traders were doing what traders do: buying protection.
One market note published on Dec. 19 highlighted:
- Elevated put activity and a higher put/call volume ratio versus typical levels
- A technical breakdown below a key moving-average area, with prior resistance around the upper-$60s [18]
Take technical commentary with the appropriate grain of salt (it’s astrology with spreadsheets), but it does capture sentiment: today was a “risk-off” day for KBH holders.
The bigger housing backdrop: affordability is still the boss fight
KB Home’s CEO explicitly framed the operating environment as challenging due to affordability concerns and elevated mortgage rates, even while highlighting customer satisfaction and the company’s focus on “affordable personalized” homes. [19]
Zooming out, recent industry data has also suggested homebuilder sentiment has improved somewhat—but that doesn’t automatically translate into easy profits if costs rise or buyers remain payment-constrained. [20]
That tension—demand exists, but payment math is tight—is basically the entire 2025 housing narrative in one sentence.
What to watch next for KB Home stock
The market has moved on from the Q4 print. The next KBH debate is about the trajectory from here.
Key items that could drive the next major move:
- Gross margin performance in Q1 2026 versus the 15.4%–16.0% guide (and whether incentives intensify or fade). [21]
- Net orders and cancellations: whether the spring selling season improves the order book, or whether backlog continues shrinking. [22]
- Community count growth and mix: several analysts specifically referenced a potential shift back toward build-to-order as a lever for later-2026 results. [23]
- Mortgage-rate direction and consumer confidence: the macro variables KB Home can’t control but must live with. [24]
- Capital allocation pace: whether buybacks accelerate at lower prices and how that interacts with land spend and spec inventory strategy. [25]
Bottom line
KB Home stock’s drop on December 19, 2025 is a classic “good quarter, uneasy outlook” reaction.
The company beat expectations in Q4, but the market is repricing what looks like a margin-compressed start to 2026, with backlog declines amplifying the worry. Analysts responded quickly—cutting targets and estimates in several cases—while still disagreeing widely on how much upside remains once the cycle turns. [26]
References
1. www.businesswire.com, 2. www.businesswire.com, 3. www.businesswire.com, 4. www.businesswire.com, 5. www.businesswire.com, 6. stockstory.org, 7. www.businesswire.com, 8. stockstory.org, 9. www.businesswire.com, 10. www.businesswire.com, 11. m.investing.com, 12. www.investing.com, 13. m.investing.com, 14. www.investing.com, 15. www.marketbeat.com, 16. www.businesswire.com, 17. www.businesswire.com, 18. www.schaeffersresearch.com, 19. www.businesswire.com, 20. www.reuters.com, 21. www.businesswire.com, 22. www.businesswire.com, 23. www.investing.com, 24. www.businesswire.com, 25. www.businesswire.com, 26. www.businesswire.com
