KB Home CEO: The start to the spring selling season is 'more muted' than usual

“We thoughtfully and selectively adjusted pricing as needed on a community by community basis to stimulate demand and achieve a higher selling pace… While base price is the main motivator for our customers, we also provided mortgage related support to our buyers as needed.”

“Consumers responded to these adjustments. We believe we have found the market.”

“I would say in broad terms that Florida was our softest state in terms of sales demand in the first quarter. And because of that, we took the most pricing action there to find the market. And I’d say roughly two thirds of our communities, probably the same price range between 5,000 and $30,000 [in affordability adjustments] but we had to do more in Florida to find that market. And I’ll just start with like Jacksonville, for example, using that as a proxy. They’re right at seven months of supply. So, it’s a month or so above what a historical norm would be in terms of resale supply or where most people consider a balanced market. And resale is a really efficient market. One positive that we see in that [Jacksonville] market is it is getting absorbed. So you’ve got days on market actually down year-over-year despite that higher supply, but it’s likely because pricing has moved [down]. So we’re seeing that [Jacksonville] market react. We’ve done the same thing in that market to find where we need to be to sell and where we can offer that new personalized energy efficient product with a small premium to resell, we find that we win. Looking at the rest of Florida, Orlando was similar. They’ve seen their days on or their months of supply increase to about the same level.

We have not seen the pricing levels adjust there [in Orlando] like they’ve started to in Jacksonville. And their [Orlando’s] days on market continue to be pretty elevated. So maybe some more significant adjustments [are coming] there [in Orlando]. The other [Florida] business we have is Tampa. They’ve got a similar situation, but lower overall months of supply than Jacksonville and Orlando. So even within those three markets, it’s submarket by submarket. Some performed better than others and we’ve had to adjust the moves that we’re making based on that.”

“Our Las Vegas business is one of our largest and strongest performers, having consistently generated the highest gross margins and profitability in the company,”

“Excluding inventory related charges, our housing gross profit margin was 20.3%, above the midpoint of our guidance for the 2025 Q1. For the year earlier quarter, it was 21.6%. We are forecasting housing gross profit margin for the 2025 Q2 in the range of 19.1% to 19.5% and for the full year [2025] in the range of 19.2% to 20%, assuming no inventory related charges. Our gross margin outlook for both periods reflects lower selling prices than we anticipated in January, reduced operating leverage on lower delivery volume and the challenging operating environment.”

“On the labor, I’d say outside of the normal things that we would deal with, outside of any kind of regulatory change or ICE or immigration policy changes, it’s really just been the same. We’ve seen nothing at all related to immigration. I mean, any kind of normal type labor shortage we might see on a day to day basis in a typical year may still be there, but nothing at all related to immigration policy [changes].”

“I haven’t seen it in the other products. That may be something that’s coming down the road. We haven’t seen that yet. As to the lumber, we try to diversify on how we lock. And we’ll have ninety days, maybe one hundred and twenty days on the long term end. Some divisions we’re locking for shorter term. As we look at the recent locks, most of our divisions are covered for the majority of the quarter here. But at some point, if lumber continues to go up and depending on what happens with tariffs, we don’t know what that’s going to do to domestic lumber pricing. But when those locks expire, we will have to adjust.”