06:26 AM EDT, 06/24/2025 (MT Newswires) -- KB Home ( KBH ) shares were down Tuesday after the company cut its full-year housing revenue outlook amid a softening market, even though the homebuilder reported better-than-expected fiscal second-quarter results.

Housing revenue is now set to come in between $6.3 billion and $6.5 billion for fiscal 2025, the company said late Monday, down from its previous projections of $6.6 billion to $7 billion. In the previous quarter, the metric slipped to $1.52 billion from $1.7 billion on a yearly basis.

The stock dipped 0.6% in recent premarket activity.

Softening housing market conditions and net order results from the first half prompted KB Home ( KBH ) to reset its revenue expectations, Chief Executive Jeffrey Mezger said during an earnings call, according to a FactSet transcript. "We anticipate the lower top line will contribute to lower margins although we continue to pursue additional improvements in build times and direct costs, and we are rightsizing our overhead structure to align with our lower volume this year," according to Mezger.

Housing gross profit margin is pegged at 19% to 19.4% for the ongoing year versus the prior estimate of 19.2% to 20%, because of expectations for "pricing pressure and mix variation," which the company aims to partially offset by lower construction costs, Chief Financial Officer Robert Dillard said on the call. The homebuilder sees average selling prices in a range of $480,000 to $490,000 for fiscal 2025, reflecting a lower top line from the previous guidance of $495,000.

The long-term outlook for the housing market remains favorable, but consumers are "continuing to demonstrate a lack of confidence about the short term," impacting their home purchasing decisions, Mezger told analysts. Demand was subdued in the spring selling season as persistent affordability challenges were exacerbated by volatile and elevated mortgage rates, as well as macroeconomic and geopolitical uncertainties, according to the CEO.

KB Home's ( KBH ) net income dropped to $1.50 a share for the three-month period ended May from $2.15 a year ago, but topped the FactSet-polled consensus of $1.46. Overall revenue fell to $1.53 billion from $1.71 billion, surpassing the Street's view for $1.5 billion.

Homes delivered declined 11% to 3,120 while the average selling price inclined to $488,700 from $483,000 in the prior-year quarter. Housing gross profit margin retreated to 19.3% from 21.1%. Net orders slid 13% to 3,460 homes.

Orders didn't follow the "typical spring trajectory" and declined in April and May, after a robust performance in March, Mezger said on the call. The company anticipates housing revenue to be between $1.5 billion to $1.7 billion for the third quarter, Dillard said. Housing gross profit margin is expected at 18.1% to 18.7%, while average selling price is pegged at $470,000 to $480,000.