KB Home: California Dreamin'

Research evidence excerpt

KB Home: California Dreamin'

Equity Research

U.S. Homebuilding & Building Products

24 June 2026

KB Home

California Dreamin'

Margins and ASPs ramping into 4Q, supporting higher 2027

estimates, driven by mix shift to BTO and California

community pipeline rebuilding. PT up to $57. KBH OVERWEIGHT Unchanged

U.S. Homebuilding & POSITIVE

We expect a positive stock reaction today. We think this quarter likely marks the end of Building Products Unchanged

downward revisions for KBH, which may be unique in homebuilders (and admittedly later

Price Target USD 57.00than we had thought, but we are now here). An idiosyncratic mix shift back to BTO product raised 2% from USD 56.00

coupled with a well-timed opening of higher-priced Bay Area communities is driving a

Price (23-Jun-26) USD 52.73pronounced margin uplift into 2HE for KBH, with legs into 2027E. This is unusual for

Potential Upside/Downside +8.1%builders today, and we note the conference call was clear that the Spring Selling Season of Source: Bloomberg, Barclays Research

2026 was a disappointment, which is generally the read to most others. Along with our

relatively favorable view towards SMID-cap homebuilders today, and KBH’s specific efforts

now paying dividends, we remain OW KBH within builders, lifting estimates and our PT. U.S. Homebuilding & Building

ProductsCurrently trading at 0.8x book, we think KBH is attractively valued, supported by its

Matthew Bouleyongoing share repurchase below book.

+1 212 526 9029

matthew.bouley@barclays.comDemand still choppy: We think a softer order outcome (-4% y/y) was already expected given

BCI, US

the overhang of soft consumer confidence over the course of this year's spring selling

season. Through 2Q, KBH noted softer demand on account of overall uncertainty throughout Elizabeth Langan