"There's no doubt about it: Housing market softening across the Sunbelt-the epicenter of U.S. homebuilding-has caused homebuilders to lose pricing power over the past year."
"Amid the additional margin compression, some giant homebuilders are adjusting their strategies. Lennar is finally easing up a little on its market share, taking volume-over-margin strategy, while KB Home-a homebuilder ranked No. 526 on the Fortune 1000-said on December 18 that it plans to lean even harder into built-to-order (more on that below)."
"During the Pandemic Housing Boom, many publicly traded homebuilders achieved record profit margins as home prices soared and buyer demand ran red-hot. Ever since the national housing demand boom fizzled out in the summer of 2022, many large homebuilders have reduced margin and made affordability/pricing adjustments where and when needed to maintain their sales pace or prevent a bigger sales pullback."
Housing market softening across the Sunbelt has eroded homebuilders' pricing power over the past year. Some large builders are changing strategies in response to margin compression, with Lennar prioritizing volume over margin and KB Home increasing focus on built-to-order. KB Home reported Q4 2025 results for the quarter ending November 30 and highlighted continued market difficulty even for builders avoiding aggressive incentive wars and speculative inventory. KB Home's housing gross profit margin declined to 17% in Q4 2025 from a Q4 cycle peak of 24.1% in Q4 2021, marking its lowest Q4 level since 2016.
Read at Fast Company
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