KB Home has opened two new communities—Sendero and Prado—within the Griffin Park master plan in Manteca, California. The launch adds 1,200 new homes to the builder’s Central region portfolio and signals a continued push into high‑demand markets in the San Joaquin Valley.
The company’s Q3 2025 results showed revenue of $1.62 billion, a 1.9% beat over the consensus estimate of $1.59 billion, driven by a 3% increase in homes delivered in the Central region and a modest 2% rise in average selling price. EPS of $1.61 per share surpassed the $1.50 estimate by $0.11, a 7.3% beat, largely due to disciplined cost control and a higher mix of built‑to‑order homes that command 250–500 basis points higher margins.
Despite the quarterly beat, KB Home lowered its full‑year 2025 revenue guidance to $6.1 billion–$6.2 billion from the prior $6.3 billion–$6.5 billion range, citing a softer housing market and higher construction costs. The company also trimmed its operating income margin outlook to 18.0% from 18.5%, reflecting ongoing cost inflation and a shift toward inventory homes that erode gross margin.
The BTO strategy remains a core pillar of the company’s margin strategy. Management aims to increase the BTO mix to 70% from the current 50%, a move that should lift gross profit margins by 250–500 basis points. CEO Jeffrey Mezger noted that “as the build‑to‑order mix grows, we believe it will support a higher gross margin as these homes currently generate a gross margin that is 250 to 500 basis points higher than our inventory homes.”
Investors reacted to the guidance downgrade and the year‑over‑year decline in revenue and operating income, which tempered enthusiasm for the quarterly beat. The market’s focus on the lowered outlook underscores concerns about continued affordability pressure and the impact of rising interest rates on home demand.
The opening of Sendero and Prado adds inventory that can be tailored to local buyer preferences, positioning KB Home to capture demand in a region that has historically delivered strong growth. However, the company’s cautious guidance signals that the builder remains mindful of macro headwinds and is prioritizing margin preservation over volume expansion in the near term.
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