KB Home (KBH) lowered its full-year housing revenue outlook as affordability challenges and macroeconomic uncertainties weigh on consumers' home buying sentiment, while the company's fiscal first-quarter housing sales unexpectedly declined, sending its stock down early Tuesday.

The homebuilder now expects housing revenue to be in a range of $6.6 billion to $7 billion for fiscal 2025, it said late Monday, compared with its previous projections for $7 billion to $7.5 billion. The current consensus on FactSet is for almost $6.9 billion.

Housing gross profit margin is pegged at 19.2% to 20% for the current fiscal year versus the prior forecast of 20% to 21%. Rising framing lumber prices could be a risk to gross margin guidance, especially if tariffs or other catalysts drive further price increases, Wedbush Securities said in a Monday client note. Shares of the company dropped 8% in the most recent premarket activity.

"Although we missed our sales goals for the first quarter, we are encouraged by the significant improvement in weekly sales and normalizing absorption pace over the last five weeks," Chief Executive Jeffrey Mezger said in a statement. "While our sales trends have improved, we are reducing our revenue guidance for fiscal 2025 primarily to reflect the lower level of net orders we generated in the first quarter."

For the three months through Feb. 28, homebuilding revenue fell to $1.39 billion from $1.47 billion the year before, defying the Street's view for an increase to $1.5 billion. Homes delivered rose 9% to 2,770 while the average selling price inclined 4% to $500,700. Net orders slipped 17% to 2,772 homes.

"The 2025 spring selling season started slower than in previous years, reflecting a decline in consumer confidence as consumers processed the variables relating to macroeconomic and geopolitical issues," Chief Operating Officer Robert McGibney said during an earnings call, according to a FactSet transcript. "This decline in confidence is leading homebuyers to take longer to make their purchase decisions."

Net income decreased to $1.49 a share from $1.76 in the prior-year quarter, below the average analyst estimate of $1.57. Housing gross profit margin declined to 20.2% from 21.5%. Overall homebuilding costs and expenses narrowed to $1.26 billion from $1.3 billion last year.

The company anticipates homebuilding revenue to come in between $1.45 billion and $1.55 billion for the second quarter, Chief Accounting Officer William Hollinger said on the call. The Street is looking for $1.62 billion. Housing gross profit margin is set to be in a range of 19.1% to 19.5%, reflecting lower-than-expected selling prices, reduced delivery volumes and the challenging operating environment, according to Hollinger.

In a separate statement, KB Home said it named Robert Dillard as chief financial officer, effective March 31. Dillard, who most recently served as CFO of Sonoco Products (SON), will succeed Jeff Kaminski, who decided to retire in early 2025.