KB Home bets on built-to-order strategy amid a spec-heavy market
Summary
KB Home is shifting its focus to a built-to-order (BTO) strategy, aiming for higher margins in a challenging market. Hosts should pay attention to this trend as it may impact competition and pricing in their local markets, especially if private builders react to the changes.
Key Insights
- •KB Home executives state built-to-order homes typically result in gross margins 300 to 500 basis points higher than spec homes.
- •The builder's quarterly gross profit margin was 17% and is expected to bottom out between 15.4% and 16% during Q1 of 2026.
Action Items
- ✓Consider how your local market may be impacted by shifts in builder strategies, especially if builders are focusing on either built-to-order or spec homes, and how those impacts could change your pricing strategy to remain competitive.Effort: mediumImpact: medium
Common Mistakes
- ⚠Pivoting away from spec homes could lead to fewer sales and declining market share, even if margins do increase.
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