The Numbers Come First
Rob McGibney stepped into the CEO chair at KB Home on March 1 and has spent his first two earnings calls delivering bad news. In his debut quarter, year-over-year revenue fell 23% to $1.08 billion and net income collapsed 70% to $33.4 million. The second quarter was worse on the top line: revenue down 27% to $1.1 billion, earnings off 75% to $27.3 million. The stock has declined since he took over. Borrowing costs remain elevated. Consumer confidence is soft. Higher oil prices and rising construction costs add pressure McGibney freely admits he cannot control.
What he can control, he is moving on fast.
Built-to-Order as a Margin Defense
The first lever is a hard pivot toward built-to-order homes. In the second quarter, that format accounted for 73% of net orders, up from 57% a year earlier. The logic is straightforward: buyers who customize their own home pay more, cancel less, and demand fewer discounts. 'We're not forcing that buyer to pay for things that they don't value, allowing them to put the things in the home that they really do value and care about,' McGibney told Fortune. 'We allow people to personalize the home not just for the fit, finish, function and features but also to their budget.'
The trade-off is real. Customized homes take longer to build, which exposes buyers to mortgage-rate risk during the wait. McGibney acknowledges the tension but frames personalization as a net positive for both sides of the transaction.
Chasing a First-Time Buyer Who Has Changed
The second lever is demographic. McGibney wants more first-time buyers — a cohort whose average age has now reached 40. The median age of all U.S. homebuyers has moved from 39 to 59 over the past 15 years, a structural shift that reflects delayed marriage, delayed children, and what McGibney calls expectations of 'quick gratification.'
The profile of today's first-time buyer is not what it was a decade ago. 'We're seeing first-time buyers who are making $140,000 a year, have a 740 FICO score and put down $70,000,' he said. 'If you go back a decade or so, FICO scores were much lower and incomes were certainly lower.' The barrier, in his reading, is less financial capacity than financial willingness. 'When I bought my first house, we had to go through some pain,' he said. 'There's some sacrifices to make that first step, but people who make it have significantly more wealth generation capability over time.'
The personalization strategy and the first-time-buyer push are deliberately linked. McGibney argues that Gen Z consumers were raised on customization — from Nike ID shoes to Chipotle orders — and expect the same from the largest purchase of their lives. 'It stands to reason that they want the ability to personalize what's going to be the largest purchase they've made up to that point,' he said.
On affordability, he is candid about the ceiling. 'We as a company, or me as a CEO, can't change the math,' he said, adding that KB Home is 'working aggressively to get as far down that K as we can by offering better affordability.'
CEO Times Read
McGibney's playbook is a textbook free-enterprise response to a difficult market: cut what doesn't work, price to value, and let the buyer decide. The built-to-order shift is not charity — it protects margins and reduces cancellation risk. The first-time-buyer pitch is not social policy — it is an underserved market segment with documented income and credit strength.
The harder truth buried in these numbers is that a generation of Americans with solid earnings and strong credit scores is sitting on the sidelines of homeownership. That is not a KB Home problem to solve alone. It is the predictable result of years of regulatory drag on new construction, zoning barriers that restrict supply, and a rate environment shaped by Washington's fiscal choices. McGibney can sharpen his product. Only clear rules, limited government and a genuine commitment to housing supply can move the broader market.
