"According to executives, built-to-order homes typically result in gross margins 300 to 500 basis points higher than spec homes, and KB is now able to build a BTO home in an average of just under 120 days, down 20% year-over-year. Some divisions are now building BTO homes in less than 100 days on average. This improved efficiency is a big win for KB Home, as the improved cycle time aligns much better with the timeline for resales and spec homes and allows buyers to move in much quicker."
"Would you rather have a completed spec with a lot of incentives to move it, or do you want to build your own home and create your own value and close 30 days later or 45 days later? So what we're seeing is, with our build times coming down, the value proposition of the personalized home at an attractive price is more compelling."
"When we got into starting specs, it was largely driven by the supply chain crunch that we had in our cycle times. It expanded big time, and it just made it difficult for a lot of reasons to sell BTO when it was taking 220 days, 240 days to deliver that home, Rob McGibney, president and COO, said during the earnings call."
KB Home's BTO mix rose from 50% in Q3 to roughly 57% expected in Q1 2026, with a goal of 70% by the end of 2026. Built-to-order homes typically deliver gross margins 300 to 500 basis points higher than spec homes. Average BTO build time is now just under 120 days, down 20% year-over-year, with some divisions averaging under 100 days. Shorter cycle times align better with resales and spec timelines and let buyers move in much quicker. The move back to a BTO-heavy mix stems from improved efficiency after prior supply chain-driven cycle times of 220–240 days, making personalized homes at attractive prices more compelling than completed specs with large incentives.
Read at www.housingwire.com
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