Raymond James Downgrades KB Home Amid Strategic and Competitive Concerns

Core Viewpoint - Raymond James downgraded KB Home to Market Perform from Outperform due to disappointment with fourth-quarter 2025 results and increased near-term risks associated with a shift in the company's operating strategy [1] Group 1: Company Strategy - The downgrade reflects concerns over KB Home's return to a primarily build-to-order model while entry-level competitors are aggressively clearing speculative inventory through mortgage rate buydowns [2] - Some customers may appreciate the simplified sales process and focus on personalization for build-to-order homes, which can still be delivered within approximately 120 days [2] Group 2: Competitive Landscape - Analysts express concern that KB Home may be at a competitive disadvantage as rivals are increasingly willing to offer financing incentives that lower monthly payments, preserve margins, and accelerate inventory turnover [3] - In the current market, affordability has become the dominant purchasing criterion for buyers, which may further impact KB Home's competitive positioning [3]