Muted demand at the start of the typically busy spring selling season contributed to year-over-year declines in revenue and deliveries in the first quarter for KB Home. Revenue fell 5% to $1.47 billion, deliveries decreased 9% to 2,770, and net orders fell 17% to 2,772.
As a result, first quarter profit decreased 21% to $109.6 million and profit per share fell 15% to $1.49. Consensus estimates from Wall Street projected profit of around $1.5 billion and profits per share of $1.57.
The decline in orders translated to a lower monthly orders pace (3.6) than the same period a year ago (4.6) and a higher cancellation rate (16% in 2025 vs. 14% in 2024). The average selling price for KB Home increased 4% to $500,700 in the first quarter.
“Consumers are working through affordability concerns and uncertainties related to macroeconomic and geopolitical issues, which are causing them to move slowly in their home buying decisions,” chairman and CEO Jeffrey Mezger said. “Although we missed our sales goals for the first quarter, we are encouraged by the significant improvement in weekly sales and normalizing absorption pace over the last five weeks.”
Beyond the Numbers
While maintaining a more positive long-term outlook for the housing market, KB Home lowered its revenue guidance for fiscal 2025 due to the market conditions impacting first quarter results.
“We took action in mid-February, evaluating our base pricing in every community relative to local market conditions, then repositioning our communities with a focus on offering the most compelling value,” Mezger shared during the builder’s earnings call. “We were encouraged by buyers’ responses to these actions and saw a meaningful improvement in our net orders in the last two weeks of the quarter, which has continued into the first three weeks of our second quarter.”
Commenting on costs and labor, president and chief operating officer Robert McGibney said KB Home had not experienced “any meaningful” trade labor shortages while lumber prices are “protected” for second quarter starts.
“Our value engineering and studio simplification efforts are yielding results as we further reduced direct costs on our homes started during the first quarter. Direct costs were down both sequentially and year-over-year, helping to offset the impact of our price reductions and increases in land costs,” McGibney said. “Regarding lumber, we have started moving toward longer locks with expectations of tariffs being implemented. Our national purchasing team, working with our divisions, has effectively managed to hold off anticipated tariff-related cost increases to date.”
New CFO
In addition to reporting earnings for the first quarter, KB Home welcomed Robert Dillard as the company’s new executive vice president and chief financial officer. Dillard most recently was CFO at packaging and industrial products company Sonoco Products Company.
“Rob is a well-rounded and seasoned executive with both operations and finance experience, including business unit P&L responsibility, at a number of different industrial and consumer companies,” Mezger said. “In addition, he is a proven and thoughtful leader, highly skilled in accounting and finance, with a focus on driving profitability and returns.”
