Raymond James downgraded KB Home (NYSE: KBH) to Market Perform from Outperform, citing disappointment with fourth-quarter 2025 results and heightened near-term risks as the company shifts its operating strategy.

The firm said the downgrade reflected concerns over KB Home's pivot back to a primarily build-to-order model at a time when entry-level competitors continued to aggressively clear speculative inventory using mortgage rate buydowns. While Raymond James acknowledged that some customers may welcome the simplified sales process and renewed emphasis on personalization for build-to-order homes that can still be delivered within approximately 120 days, the firm questioned the tactical timing of the shift.

From a competitive standpoint, the analyst expressed concern that KB Home could be placing itself at a disadvantage. Rivals were described as increasingly willing to deploy financing incentives that lower monthly payments, preserve margins more effectively, and accelerate inventory turnover in an environment where affordability had become the dominant purchasing criterion for buyers.