06:31 AM EDT, 09/25/2025 (MT Newswires) -- KB Home ( KBH ) lowered its full-year housing revenue outlook as the homebuilder aims to maintain a disciplined pricing strategy despite a shortfall in net orders in its fiscal third quarter, even though earnings and revenue topped expectations in the period.

Housing revenue is now set to come in between $6.1 billion and $6.2 billion for fiscal 2025, the company said late Wednesday, down from its previous projections of $6.3 billion to $6.5 billion. In the previous quarter ended August, the metric slipped to $1.61 billion from $1.75 billion on a yearly basis.

For the third quarter, KB Home's ( KBH ) net orders declined 4% to 2,950 homes. The company saw a monthly absorption pace per community of 3.8 net orders, which was lower than its third-quarter pace for the past couple of years, Chief Executive Jeffrey Mezger said during an earnings call, according to a FactSet transcript. "As a result, our net orders were below our internal sales goal," Mezger added.

The company does not plan to sell "at any price to make up for the shortfall in net orders in our third quarter," Mezger told analysts.

"Consistent with our strategy to optimize every asset, we are maintaining discipline on price and pace and have adjusted our guidance for 2025 to reflect this priority," Chief Financial Officer Robert Dillard said on the call.

Housing gross profit margin is pegged at 19.2% to 19.3% for the ongoing year versus the prior estimate of 19% to 19.4%. The homebuilder forecasts average selling prices to be at roughly $483,000 for the fiscal year, compared with its previous guidance of $480,000 to $490,000.

"The longer-term outlook for the housing market remains favorable, driven by demographics and the ongoing undersupply of homes," Mezger said on the call. "We are encouraged by the decline in mortgage interest rates, which should support greater demand for homeownership."

KB Home's ( KBH ) net income dropped to $1.61 a share for the third quarter from $2.04 a year ago, but topped the average analyst estimate on FactSet of $1.50. Overall revenue fell to $1.62 billion from $1.75 billion, but came in ahead of the Street's view for $1.59 billion.

Homes delivered declined 7% to 3,393 while the average selling price decreased to $475,700 from $480,900 in the prior-year quarter. Housing gross profit margin fell to 18.2% from 20.6%.

For the fourth quarter, the company anticipates housing revenue to be in a range of $1.6 billion to $1.7 billion, according to Dillard. Housing gross profit margin is expected at 18% to 18.4%, assuming no inventory-related charges, while average selling price is pegged at between $465,000 and $475,000, the CFO added.

"Our fourth quarter is typically one in which we elect not to take aggressive steps to capture inventory sales as it is a seasonally slower period," Mezger said. "Our land positions are valuable, and there is merit to exhibiting discipline when incremental volume gains are low."