Giant homebuilder KB Home shifts strategy amid a housing market where it lacks pricing power

Core Insights - The housing market in the Sunbelt is softening, leading to a loss of pricing power for homebuilders over the past year [1] Group 1: KB Home's Financial Performance - KB Home's gross profit margin has compressed to 17% in Q4 2025, the lowest level since Q4 2016, down from a peak of 24.1% in Q4 2021 [4][6] - The adjusted housing gross profit margin, excluding $13.7 million of inventory-related charges, was 17.8%, reflecting a 310 basis points decline due to pricing pressure and other factors [7] Group 2: Pricing Strategies - KB Home's average selling price has decreased by 8.8% from its peak in 2022, contrasting with other builders like Lennar that have opted for mortgage rate buydowns [8][9] - The company has chosen to implement outright price cuts as a strategy to address market weaknesses, as indicated by its CEO [9]