KB Home (NYSE: KBH) shares fell more than 8% intra-day on Friday after the homebuilder issued a cautious outlook for 2026, despite reporting fourth-quarter results that exceeded analyst expectations.

The company posted adjusted earnings of $1.92 per share for the quarter ended November 30, 2025, beating analyst estimates of $1.79. Revenue totaled $1.69 billion, slightly above the consensus forecast of $1.66 billion, though down 15.5% from $2.00 billion in the same quarter last year.

Housing deliveries declined 9% to 3,619 homes, while the average selling price fell 7% year over year to $465,600. Excluding inventory-related charges, the homebuilding operating income margin contracted to 7.8%, down from 11.5% in the prior-year period.

Investor sentiment turned negative following the company's fiscal 2026 guidance, which projected full-year housing revenue of $5.10 billion to $6.10 billion, implying a potential decline from fiscal 2025 revenue of $6.21 billion. For the first quarter, KB Home forecast deliveries of 2,300 to 2,500 homes and housing revenue of $1.05 billion to $1.15 billion.

The company reported a quarter-end backlog of 3,128 homes valued at $1.40 billion, down from 4,434 homes valued at $2.24 billion a year earlier, underscoring ongoing challenges in the housing market.