By Mariapaula Gonzalez

Fewer people are buying homes. Prices are high. Even builders aren't feeling so confident.

While it's likely that the summer season won't be significantly better than the spring, Wall Street still sees some things to like in the big builders -- including KB Home, which reports earnings on Monday after the market closes.

Analysts remain positive about KB Home's long-term outlook given underlying housing needs and an underbuilt housing market, but expect "choppy" second-quarter results , according to a recent UBS analyst note. The consensus estimate among analysts tracked by FactSet calls for KB Home to report earnings per share of $1.46 on $1.5 billion in revenue for the period.

KB Home stock has slipped 26% in the last 12 months, performing worse than builders overall. The iShares U.S. Home Construction exchange-traded fund, which tracks builders and other companies related to home construction, is down about 13% over that same span. (However, KB Home stock had some positive movement in recent days. Shares rose 2.2% Friday, their largest percent increase since Jun. 10, when they gained 3.4%, according to Dow Jones Market Data.)

Barron's previously reported that when KB Home posted first-quarter results in March, the builder reduced its full-year guidance for housing revenue to range from $6.6 billion to $7 billion, down from $7 billion to $7.5 billion, to better align with "muted" sales. The company also decreased its average selling price and margin expectations.

KB Home also reported lower-than-expected deliveries and a 12% year over year decline in net orders last quarter. The company said that the wildfires in Southern California impacted roughly 75 of their deliveries earlier this year.

Investors may be worried about low inventory as second-quarter earnings near. Housing starts across the U.S. fell 9.8% in May to postpandemic lows, a weaker-than-expected level, according to Census Bureau data. And while U.S. housing listings are up 32% year-over-year, they remain 12% below where they were in 2019, according to realtor.com data. ( News Corp, which owns Barron's publisher Dow Jones, also owns Realtor.com operator Move.)

Using technology to boost volume and production could be a turning point for home builders. Analysts are watching to see if and how KB Home will incorporate technology into its home construction, according to a team of UBS analysts led by John Lovallo. "Introducing technology and greater efficiency into residential construction provides the ability to increase production capacity and ultimately reduce the cost of homeownership," they wrote in a note.

Borrower confidence has also fallen significantly amid market volatility and recession fears, leading to a decline in home demand. Applications for home purchase loans fell a seasonally adjusted 3% for the week ending Jun. 13, according to data from the Mortgage Bankers Association. While mortgage rates dipped slightly that same week, the levels have remained close to 7% this year.

KB Homes and other builders must also contend with rising interest rates. But buyers may regain a bit of confidence in 2025 after Fed Governor Christopher Waller hinted on Friday about a July rate cut, saying that inflation was "running very close" to the central bank's 2% goal.

Looking ahead, KB Home investors will be paying close attention to any cost pressures amid tariff uncertainty, construction backlog relief, and any updated outlook on gross margin.

Shaina Mishkin contributed to this report.

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June 23, 2025 04:00 ET (08:00 GMT)

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