Scale is homebuilding’s buzzword of the moment. Still, there’s scale. And then there’s what a top-10 homebuilder does with it when everybody else is scrambling for it.
That sharp difference, and executing on that distinction, may be KB Home President and CEO Rob McGibney’s top priority as he assumes the reins from longtime predecessor Jeff Mezger at a pivotal moment for the company and the homebuilding industry.
KB Home ranks No. 7 among U.S. homebuilders by annual unit closings and No. 8 by home sales revenue in the HousingWire Homebuilder Rankings. That places the Los Angeles-based public builder squarely among homebuilding’s national leaders.
Strategically, it also places KB in the thick of an increasingly unforgiving competitive arena.
Industry concentration and consolidation continue to intensify. M&A is reshaping ownership. The biggest builders increasingly wield scale not only as a national-volume advantage but also market by market, seeking deeper local positions to improve access to land, purchasing power, trade relationships, marketing efficiency and customer reach.
McGibney, a 26-year KB Home veteran who stepped into his new business leadership role in March, doesn’t seem inclined to meet that challenge by trying to make KB look and act like somebody else. His bet, for all intents and purposes, is the inverse. Get KB Home back to being more thoroughly KB Home.
“What is kind of a non-negotiable under my tenure as CEO of the company is continuing to put the customer at the center from day one,” McGibney tells HousingWire TBD in an exclusive one-to-one interview. “It’s who we’ve been since I’ve been with the company. It’s what we do best, and it’s really the foundation that everything else we do is built on.”
What rides with that “non-negotiable” sounds at first like a product-and-customer strategy: a renewed emphasis on KB’s Built to Order model, which lets customers select their homesites, floor plans and design choices rather than buying homes with features and finishes someone else chose.
Listen to the entire story, though, and McGibney describes something more meaningful for the business as a whole. Built to Order is intended to serve as an operating model that connects customer value to production visibility, construction velocity, trade-partner leverage, cost control, margin predictability, and, ultimately, returns.
Alongside it is another McGibney short-list priority: getting bigger where scale matters most. Not necessarily nationally, which may amount to little more than bragging rights. Rather, locally, where it means improving performance and shareholder returns.
Back to Built to Order
KB Home didn’t suddenly discover Built to Order. As McGibney puts it, it is woven into the company’s DNA. What changed was the world around it.
During the pandemic-era supply-chain disruption, construction cycles that once made personalized production workable stretched to seven, eight and even nine months. Customers didn’t want to, or couldn’t, wait that long, especially as home prices climbed and interest rates signaled an imminent rise.
KB, like much of the industry, shifted toward speculative, ready-to-own production homes. Everybody did it. A lot of builders overbuilt. Then, conditions changed again.
Mortgage rates rose. Demand became less certain. Unsold inventory accumulated. Direct costs and incentives to move spec homes spiraled higher and higher, eroding margins. For KB, the resulting business became less financially predictable and less distinctive to the customer.
McGibney says the company concluded that the economics of a committed, sold backlog, in which the customer, price, product, and costs are understood and secured with a deposit before construction starts, would prove superior over a full housing cycle.
“We knew that it was a better business over a full cycle than one that was built on spec starts, where you try to get it right, you put homes out there, but invariably you leave things out that the customer values, or you add things into the home that they don’t really care to pay for,” he says.
Pivoting meant rerouting KB Home’s entire build cycle, and it came at a cost. KB knew that shifting its production mix would temporarily depress deliveries, reducing revenue and fixed-cost leverage as newly sold Built to Order homes worked their way through the construction pipeline.
“The way I see it, the near-term pressure and that trough that we went through on deliveries was really the price of getting back to a model that I believe will outperform over the long term,” McGibney says.
That is the strategic wager. The concessions that came with essentially retooling KB’s operational value cycle took a near-term toll. But McGibney wants KB judged on what comes after the pivot.
Affordability as a reason for choice
There’s an apparent glaring contradiction in emphasizing personalization, the inverse of standardization, at precisely the moment when affordability, or the lack of it, dominates new-home demand. McGibney sees that attainability challenge differently.
Roughly half of KB’s buyers are first-time purchasers, and another quarter are first-time move-up buyers. These households care greatly about price and monthly payments. But that’s precisely why McGibney argues Built to Order can work.
“In my view, the affordability pressure actually strengthens the case for Built to Order, not the other way around,” he says.
Here’s how to unpack the value-versus-cost difference. A spec home necessarily includes a bundle of decisions made before its eventual buyer arrives. Some of those features, finishes and upgrades will matter to that customer. Others won’t. Either way, their costs are embedded in the house.
KB’s approach starts with a competitively priced, well-appointed base home and lets customers determine where incremental spending creates value for them.
“That low starting price allows us to capture a bigger pool of buyers that can’t afford or qualify for a fully loaded spec home,” McGibney says. “And for those buyers that have more to spend and the wherewithal to spend more, they can go as big and bold as they want to create a home that really works for them, their lifestyle and what they value.”
That’s a nuanced but important take on affordability. Personalization isn’t just a way to increase option revenue. In McGibney’s formulation, it’s a way to prevent customers from being forced to finance someone else’s definition of value and instead pay for what they truly value.
And it gives KB a way to compete for first-time and younger customers without making the entire customer proposition hinge on the size of an incentive or a temporary mortgage-rate buydown.
The 100-day threshold
None of this works particularly well if a customer has to wait eight or nine months for a house. That’s where operational excellence shifts from a supporting role to a strategic necessity.
KB has compressed construction time to roughly 100 days, among its fastest levels ever. That dramatically narrows one of the inherent disadvantages Built to Order has historically faced against both quick-move-in new homes and existing homes: time.
McGibney believes conventional process improvement can squeeze out a little more. Better scheduling technology, reduced float time and tighter trade synchronization might eliminate another few days, perhaps a week or 10 days. Getting substantially beyond that will require something different.
“To get beyond the level that we’re at now, I think it’s going to take a different approach in technology, or a different approach to construction will likely be part of that,” McGibney says.
KB has been experimenting with panelization, off-site manufacturing and other methods that shift more construction into controlled environments.
For now, the constraint is less technological possibility than economics.
Alternative methods can be better and faster, McGibney says, but the cost premium remains significant compared with conventional construction. Over time, scale and process refinement may close that gap.
That makes 100 days both an achievement and a line in the sand. KB has largely captured the gains available from simply building conventional homes better. The next major cycle-time breakthrough may require changing how homes get built.
A backlog that works twice
Built to Order’s operating impact extends beyond the construction site. It changes the value of the backlog into a predictable production pipeline.
KB reported more than 1,500 sold homes not yet started at the time of its latest earnings call. In many of the company’s markets, meanwhile, housing starts have been declining sharply. For trade contractors and building materials and product suppliers, that makes visibility increasingly valuable. For KB, it makes predictability and visibility negotiable.
“We’re focused on feeding the system with Built to Order sales,” McGibney says. “It shows up as a sold-not-started backlog… really using that as an asset that we can share with our trade partners to show them what their upcoming workload is.”
That’s where the pieces begin to connect, and as competing starts decline, that visibility can become leverage in labor availability and price negotiations. The operating flywheel looks something like this: Built to Order sales lead to a sold backlog, which leads to predictable starts, which lead to even-flow production, which yields trade visibility, leading to purchasing and labor leverage, which causes faster construction and lower costs, which all result in stronger margins and returns.
In that sense, the same order creates value twice: first with a customer who has committed to the home and then operationally through the visibility that commitment gives KB.
Pace or margin depends on the dirt
That operating discipline also shapes how McGibney thinks about one of 2026 homebuilding’s defining tensions: pace versus margin.
There’s no companywide catch-all answer. A scarce coastal California infill asset with a high land basis may maximize its return at a slower sales pace and higher margin. A more affordable community where lots can be readily replenished may produce better returns by moving faster.
KB’s job, according to McGibney, is to optimize each individual asset rather than impose a single pace-or-margin prescription across the enterprise.
“There is always a push and a pull between pace and margin,” he says. “And generally, across the company, depending on how our book of business is made up, we’re targeting something north of four sales per community per month.”
The operative term: returns. Pace and gross margin are inputs. Neither, by itself, tells management whether a community is producing the most value from the capital tied up in it.
That asset-level optimization will matter even more as investors look for a clearer KB Home performance dashboard, evidence that the Built to Order transition can translate customer differentiation and operational gains into stronger financial performance.
Scale where it counts
Then there’s the scale question. KB’s No. 7 national ranking gives it considerable heft, but homebuilding’s current competitive arms race increasingly plays out below the national rankings.
The largest builders are concentrating their positions within metro areas, aiming to turn local density into advantages across land, trades, procurement, advertising, overhead and consumer awareness. McGibney agrees with the premise but differs on the definition.
“There’s a big difference between scale for the sake of scale and scale on a national basis versus scale on a local basis,” he says. “I believe that scale locally is far more important than scale nationally.”
And KB has drawn a line in the sand on what that means.
“We have a stated goal of being the top three builder in all of the markets that we serve,” McGibney says. “We’re there in some, we’re top five in others, and in other markets we’re not there yet.”
For KB, the strategic objective isn’t simply to climb from No. 7 to some higher spot on a national rankings table. It is to make the scale it already possesses more powerful as a financial and operational performance level by concentrating it locally.
KB’s Seattle traction is the proof point McGibney comes back to. KB went from essentially zero there to a top-three sales position in a few years. He views that organic expansion as a playbook KB can apply elsewhere, including Charlotte, Boise and its new Atlanta operation.
M&A isn’t excluded. KB looks at opportunities. But McGibney’s framing again comes back to returns: an acquisition premium has to be earned back and monetized. Buying scale simply to report more scale misses the point.
More KB, not a different KB
New CEO transitions often invite a familiar question. What’s going to change? McGibney’s answer is interesting because the strategy he’s describing begins somewhere else. After 26 years at KB Home, starting as a financial analyst in Las Vegas and working his way through virtually every part of the business, he isn’t presenting himself as the outsider arriving to upend an inherited model.
He believes in the model. His imperatives focus on improving it as a business operating system.
That makes McGibney’s early CEO agenda less about transformation than about intensification and execution: a stronger expression of customer choice, Built to Order production, accelerated construction, predictable backlog, asset-level discipline and deeper local market scale.
The company itself describes the proposition as these elements being interoperable and reinforcing one another.
Still, public-market investors won’t ultimately grade KB on whether it becomes more authentically KB. They’ll grade the outcomes.
Can the company restore and expand margins? Can faster turns and better cost leverage lift returns? Can it grow volumes sustainably? Can it turn more of its markets into top-three positions? And can those improvements produce a clearer, more compelling investment proposition? Those are higher bars than simply getting the Built to Order mix back to a target percentage or shaving a few more days off cycle time.
They are also the point. The McGibney era will focus on returning to what KB Home does best, believing it will be the foundation for taking the company to its next level.
