KB Home Reports Decline in Revenue and Profitability for Q2 and First Half of Fiscal 2025

KB Home reported its financial results for the second quarter and first half of fiscal 2025, revealing a decline in both revenue and profitability compared to the same periods in 2024. For the three months ended May 31, 2025, total revenues were $1.53 billion, down 11% from $1.71 billion in the prior year. Homebuilding revenues specifically decreased by 10% to $1.52 billion, while financial services revenues fell 41% to $4.87 million. The company's net income for the quarter was $107.88 million, a 36% decrease from $168.42 million in the same quarter last year, resulting in diluted earnings per share of $1.50, down from $2.15.

The decline in revenue and profitability was attributed to several factors, including a softening housing market characterized by affordability concerns and elevated mortgage interest rates, which have dampened consumer confidence. KB Home experienced a 13% year-over-year decrease in net orders, totaling 3,460 for the quarter, and a 24% decline in ending backlog value, which stood at approximately $2.29 billion. The average selling price of homes decreased by 8% to $465,600, reflecting the company's strategic pricing adjustments aimed at stimulating demand.

Operationally, KB Home's homebuilding segment faced challenges, with a 30% drop in operating income to $131.46 million for the second quarter. The housing gross profit margin also decreased to 19.3% from 21.1% in the prior year, primarily due to price reductions and increased land costs. The company reported a total of 3,120 homes delivered during the quarter, down from 3,523 in the previous year. Despite these challenges, KB Home's average community count increased by 5% year-over-year to 254, indicating a slight expansion in its operational footprint.

In terms of strategic developments, KB Home has been focusing on capital allocation, reducing investments in land and land development by 23% year-over-year to $513.9 million in the second quarter. The company also repurchased $250 million of its common stock during the first half of 2025, reflecting its commitment to returning capital to shareholders. Looking ahead, KB Home has revised its projections for the remainder of 2025, anticipating housing revenues between $6.30 billion and $6.50 billion, down from $6.90 billion in 2024, as it navigates the ongoing challenges in the housing market. The company remains focused on balancing its investments and capital returns while adapting to market conditions.