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Trump ramps up pressure on GOP holdouts as his megabill meets its ultimate fate

Trump ramps up pressure on GOP holdouts as his megabill meets its ultimate fate

CNN5 hours ago

President Donald Trump and Republican leaders are betting that key GOP holdouts will buckle under enormous pressure to pass his sweeping agenda within days – even as a number are warning they're prepared to sink the multi-trillion-dollar measure without major changes.
But tensions are escalating between the House and Senate and between moderates and conservatives who are battling over competing versions – as Trump demands the bill on his desk by July 4.
With the Senate planning a critical vote to begin debate as soon as Thursday, Senate Majority Leader John Thune and Speaker Mike Johnson are both racing to quell rebellions among their centrist and right-wing factions.
Behind the scenes, Johnson and his allies are in high-stakes talks with Senate GOP leaders to resolve final sticking points, while stressing to their own House members that they may ultimately need to back the Senate's version because further cross-Capitol negotiations aren't feasible, according to two sources familiar with the discussions, a move certain to cause an outcry among many in his conference.
That means GOP holdouts could ultimately be left with this choice: Vote for a plan they detest or sink the bill and endure Trump's wrath. GOP leaders in both chambers are gambling their members will choose the former.
'When it comes over, we'll pass it,' House Majority Whip Tom Emmer told CNN. 'We've been talking over a year. The time for voting is now.'
But multiple House Republicans are fuming that the Senate rewrote their carefully crafted version of bill – most critically to propose deeper cuts on Medicaid – and are openly calling to blow past Trump's timeline to change it back.
Plus Johnson now has at least three Republican hardliners declaring they will oppose the Senate version without even deeper spending cuts: Reps. Andy Harris of Maryland, Chip Roy of Texas and Eric Burlison of Missouri. And then there's the parochial issue dogging the GOP: The push led by New York Republicans to increase the amount taxpayers can deduct from their local levies, a deal that GOP senators want to gut and force House members to swallow.
Some are warning they won't cave – a threat GOP leaders must weigh since they can only afford three defections in each chamber to pass the bill.
'If they're trying to jam us with something that we can't support, then I think we need to take those extra days to make sure it's a good product,' said Rep. Nicole Malliotakis, who was one of 16 House Republicans who declared in a letter to both GOP leaders on Tuesday that they couldn't support the Senate's Medicaid provisions without major changes. She also met with Johnson about the issue on Tuesday.
Malliotakis was among several GOP lawmakers who told CNN she would support a formal 'conference committee' between the House and Senate – against the wishes of Trump and GOP leaders, since it would dramatically slow down the president's agenda.
Even Rep. David Joyce, a close leadership ally, said he was willing to miss Trump's July 4 deadline to fight for more of the House's original provisions.
'I think a good bill deserves to take its time,' the Ohio Republican told CNN. 'There's differences in what the Senate's talking about and what can pass here.'
The GOP is largely united on the main tenets of the bill, including extending Trump's 2017 tax cuts for individuals and businesses, imposing new work requirements on social safety net programs and fulfilling the president's campaign promises like no tax on tips and overtime pay — all while providing hundreds of billions more for the Pentagon and border security agencies. But how to pay for many of those provisions has been far more contentious, including cuts to Medicaid and phasing out Biden-era energy tax credits.
And official estimates that the measure could add more than $3.4 trillion to deficits over the next decade have left many on the right uneasy – in addition to the Senate's proposed $5 trillion increase to the national debt limit.
Meanwhile, patience is running thin in the Senate, with many Republicans eager to move on and call their House counterparts' bluff.
'It's a little arrogant to say the Senate has got to eat exactly what the House proposed. I mean it's a bicameral process,' Sen. Bernie Moreno, a Republican from Ohio. 'I don't look like Alexander Hamilton or James Madison do I? That's just the process our founders created.'
And Trump himself is heaping pressure on Congress, posting on Truth Social on Tuesday: 'Lock yourself in a room if you must, don't go home, and GET THE DEAL DONE THIS WEEK.'
Senate Republicans are particularly frustrated by the so-called SALT Caucus, the group of House Republicans in New York and California that is demanding bigger deductions on state and local tax payments.
Those Republicans cut a deal with Johnson to win their support by raising the amount of state and local levies that eligible taxpayers can deduct to a $40,000 limit. Now, several of those New York Republicans say they won't accept a penny less than that number, even though Senate Republicans say they should jam the House with a less expensive deal.
'I'm OK with them making crazy statements like that if they want,' said North Dakota Republican Sen. Kevin Cramer, referring to the House Republicans from New York. 'I hear 'red line' a lot around here. I hear that a lot, but at the end of day, it turns into a rather light pink.'
But those House GOP lawmakers pressing for tax relief said it would be a mistake to assume that they would simply swallow whatever SALT deal the Senate passes.
'I think that would be the wrong assumption,' Rep. Mike Lawler, a New York Republican and leading proponent of the House deal, told reporters Tuesday.
Any whipping operation among House Republicans, however, is complicated by the still-fluid negotiations in the Senate. GOP senators are still tweaking their bill themselves and trying to navigate changes forced on them by the Senate parliamentarian's rulings that some of their provisions are out of order with strict Senate budget rules that they must follow to pass the bill along party lines.
The biggest headache for Republicans, though, remains the fate of Medicaid.
At least 20 centrist Republicans in both chambers are trying to reverse the Senate's biggest cuts to Medicaid, which were not part of the House-passed bill. But another group of GOP hardliners – including Sens. Mike Lee of Utah, Rick Scott of Florida and Ron Johnson of Wisconsin – wants to slash even deeper from the program and have raised major concerns about the impact the bill would have on the deficit. And they all met with Trump on Monday night.
During a closed-door meeting Monday, Sen. Josh Hawley, a Republican from Missouri who has been outspoken about his concerns the bill is cutting too much into Medicaid, said North Carolina Republican Sen. Thom Tillis gave out information to senators on how much rural hospitals in states like his could lose if some of the changes the Senate rolled out went into effect.
At issue are new proposed limits on how much states can tax health care providers, a levy that helps fund the Medicaid program. Some key Republicans fear that the new proposed limits could devastate Medicaid providers, especially rural hospitals, and are demanding changes.
'Senate leadership now needs to fix this,' Hawley said. 'They're the ones who invented this new rural hospital defund scheme that the House says they can't pass. It's going to close rural hospitals. They need to get with rural hospitals, figure out what's going to work for them, and then they need to get the sign off of the House.'
'The leadership needs to work on this with rural hospitals and the House,' he said. 'This won't work to not ever talk to the House and hope that they just take the bill. That will land us in a conference committee. I don't want to do that.'
Sen. Susan Collins, a Maine Republican and a key swing vote facing reelection next year, is pushing for the bill to include a relief fund to providers hardest hit by the new cuts — potentially around $100 billion although multiple sources told CNN that the number has been extremely fluid.
'I've been very concerned about the cuts in Medicaid and the impact on my state, but other states as well,' Collins told CNN on Tuesday. 'I've also been concerned about the health of rural hospitals, nursing homes, health centers and have been working on a provider relief fund. But that doesn't offset the problem with the Medicaid cuts.'
Tillis, a Republican who like Collins is also up for reelection next year, said that the proposed Medicaid cuts could cost his state $38 billion over 10 years.
'That's a big impact,' he told CNN. He added: 'I'm very much in favor of moving in that direction. You just have to do it at a pace that states can absorb, or we're going to have bad outcomes, political and policy.'
But if Trump and Senate GOP leaders give in to the demands of those holdouts, it would drive up the already hugely expensive price tag — prompting a revolt on the right.
Rep. Andy Harris, a Maryland Republican who leads the House Freedom Caucus, contended that the Senate is moving in the wrong direction, calling for deeper cuts into Medicaid and saying it should more quickly eliminate green energy tax credits enacted under the Democrats' Inflation Reduction Act. Harris voted 'present' when the bill passed the House by a single vote last month.
But Harris said he would go even further if forced to accept the Senate bill in the coming days.
'If the Senate tries to jam the House with this version, I won't vote ' present.' I'll vote 'NO,'' Harris said Tuesday.

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GOP megabill takes aim at universities — except for this conservative Christian college
GOP megabill takes aim at universities — except for this conservative Christian college

Politico

time13 minutes ago

  • Politico

GOP megabill takes aim at universities — except for this conservative Christian college

President Donald Trump and Republicans in Congress are angling to use their megabill to turn the screws on elite liberal colleges that take millions in taxpayer funds while sitting on endowments worth tens of billions of dollars. But a single college that's a paragon of conservative higher education has managed to secure a carveout after finding itself in the crossfire. Hillsdale College, a Christian liberal arts school of fewer than 2,000 students located in southern Michigan, is one of a slew of smaller institutions that had been working to avoid being swept up in the GOP effort to raise taxes on the seemingly bottomless endowments of household names like Harvard, Princeton and Yale. But Hillsdale stands apart from those schools: For one, it's a rare institution of higher learning that the modern Republican Party applauds. Just as uncommon, Hillsdale accepts no funding from the federal government: 'The founders of our nation chose independence. As do we,' the college boasts in advertisements. That formed the crux of its argument that, on principle, Hillsdale and schools like it should not be subject to a federal tax on endowments. Senate Republicans heeded that logic in their version of the reconciliation bill that the party hopes to send to Trump's desk next week by including an exemption for schools that fit Hillsdale's profile. The reprieve is by no means guaranteed, as Hillsdale found out eight years ago. Democrats that year seized on the university's unique position, branding the exemption as an earmark for a political ally and ultimately getting it stripped from the 2017 Tax Cuts and Jobs Act with the help of a handful of Republican senators. That's why Hillsdale turned earlier this year to professional advocates for help with the latest endowment tax proposal. In April, the college retained Williams and Jensen to lobby on 'specific threats to the institutional and financial independence of the college, primarily related to the higher education endowment tax,' according to a disclosure filing. The team of lobbyists working on the account includes Dan Ziegler, who served as House Speaker Mike Johnson's top policy aide before returning to the lobbying firm in March, and who previously served as executive director of the conservative Republican Study Committee. In its meetings with policymakers, Hillsdale has reiterated its general opposition to using the tax code as a blunt force object — reaching often for the declaration from former Supreme Court Chief Justice John Marshall that 'the power to tax involves the power to destroy.' Beyond that, it has stuck to its insistence that schools that have sworn off taxpayer money should be left out of the endowment tax scheme altogether. That could end up incentivizing more institutions to follow in Hillsdale's footsteps — especially with the Trump administration taking aim at colleges' federal funding — whereas a tax hike might throw up financial roadblocks for schools who might be eyeing a move toward independence. Hillsdale's message has landed favorably on the Hill, according to a person familiar with those discussions who was granted anonymity to discuss sensitive deliberations. The person noted that the school hadn't encountered much opposition to its position on principle. Failing to exempt schools that don't accept federal funds 'penalizes most severely those institutions that have chosen the harder path of independence' from the federal government and the conditions of accepting that money, Hillsdale President Larry Arnn wrote in an op-ed in May. 'Worse still,' he added, 'this tax turns the incentives backward; it rewards dependence and punishes self-reliance. It encourages institutions to seek the shelter of government aid, where subsidies can offset tax burdens.' Hillsdale declined to comment on the record. Hillsdale has proudly touted its independence for refusing direct government funds since its founding by abolitionists in 1844. In the 1980s, Hillsdale was faced with a Supreme Court civil rights ruling that would've required universities to track admissions by race and bar sex-based discrimination in order to accept federal financial aid from students. In response, the school declared that it would no longer accept such assistance. Hillsdale's break from what it calls governmental overreach has made it at home with the right. Conservative luminary William Buckley donated much of his lifetime of writings to the school in the early 2000s. In 2016, Hillsdale hosted Supreme Court Justice Clarence Thomas as its commencement speaker. More recently, Republican leaders like Florida Gov. Ron DeSantis have sought to recreate versions of Hillsdale in their home states and to integrate its curriculum in K-12 classrooms. Hillsdale graduates are scattered throughout Washington, including in the offices of the top Republicans in Congress. Michael Anton, who joined Hillsdale's D.C. outpost after working in the first Trump administration (though he's not a Hillsdale grad himself), was tapped in April to lead the U.S. technical team in nuclear negotiations with Iran. The university regularly advertises its free online courses on subjects like ancient Christianity and the Biblical book of Genesis on Fox News, and rents various conservative email lists. Arnn, a co-founder of the conservative think tank the Claremont Institute, was even considered for Education secretary in Trump's first administration. Trump's eventual Education secretary, Betsy DeVos, has her own familial and financial ties to Hillsdale. In Trump 2.0, the universityhas partnered with the White House and the Education Department on an educational video series to promote the 250th anniversary of America's founding. The most recent installment, focused on the founding of the U.S. Army, featured Defense Secretary Pete Hegseth. Even with those credentials, as the GOP continues tinkering with the bill ahead of final passage, there's one hitch that could complicate things: At least right now, there aren't believed to be any other schools besides Hillsdale that don't accept federal cash and have large enough endowments that they're at risk of being hit by the endowment tax. Wealthy universities were first hit with a 1.4 percent excise on their endowments as part of the 2017 GOP tax bill. Given that the relationship between Republicans and higher education has only crumbled in the years since, colleges across the country had already been bracing for Republicans to take another swing at the excise tax in negotiations to renew expiring provisions in the Tax Cuts and Jobs Act. There's a tranche of smaller colleges that would be hit hard by an endowment tax hike and are trying to distance themselves from the Ivies in conservatives' crosshairs. But even though Hillsdale would likely benefit from some of the endowment tax changes those schools have pitched lawmakers on, including sparing schools smaller student bodies, the college has thus far declined to take other schools up on overtures to join their coalitions as it leaned on its more unique messaging. Hillsdale isn't in the clear yet. There are questions about whether several of Republicans' changes to the endowment tax are allowed under the arcane procedural rules of the reconciliation process. The exclusion was not included in the House version of the bill, and not much is set in stone amid horsetrading within the conference. The specter of the last Republican tax debate also looms large given Hillsdale's distinctive position. Earlier versions of the 2017 Tax Cuts and Jobs Act would have subjected schools with endowments of at least $250,000 per student to the excise tax. But during floor debate in the Senate, Sen. Ted Cruz (R-Texas) — who received an honorary degree from Hillsdale in 2013 — and then-Sen. Pat Toomey (R-Pa.) introduced an amendment that would have exempted from the tax any otherwise-eligible schools that don't take federal funding. The amendment triggered an outcry from Senate Democrats, who pointed out that the only university that would apply to was Hillsdale. Four Republican senators ended up voting with all Democrats to sink the amendment. Hillsdale still managed to luck out, but only temporarily, thanks to language in the final bill that raised the threshold for the tax to $500,000. The House reconciliation bill retains that threshold for the 1.4 percent tax, but neither measure indexes it to inflation, effectively lowering the threshold as time goes on. Hillsdale's endowment finally reached eligibility a few years ago, and much further down the line, other schools that have sworn off federal funding may eventually join it. If the Senate version prevails, however, Hillsdale would pay nothing. In Arnn's May op-ed, he wrote that the House-passed reconciliation bill leaves 'untouched the vast web of colleges and universities sustained by taxpayer dollars, often bloated with bureaucracies committed to fashionable ideas, far removed from the purposes of education.' Ironically, some of the biggest winners out of the Senate's version of the endowment tax — aside from Hillsdale — were schools with the biggest endowments, like Harvard, that would have seen their tax rate soar to 21 percent under the House bill. Senate Republicans softened the tax hike to less than 10 percent for the wealthiest universities.

Trump isn't ready for a ceasefire with Massie
Trump isn't ready for a ceasefire with Massie

Politico

time14 minutes ago

  • Politico

Trump isn't ready for a ceasefire with Massie

Just as President Donald Trump appears to have hit pause on a major conflict in the Middle East, he is intensifying one at home. Rep. Thomas Massie (R-Ky.) is the chief target of the president's powerful political operation, which is looking to oust the outspoken congressman in the GOP primary next year. The congressman has been a thorn in the president's side in the past, but Massie's latest threat to introduce a resolution aimed at reining in presidential war powers comes as Trump was already seething about Massie's multiple attempts to thwart the 'big, beautiful bill' ahead of Republicans' self-imposed July 4 deadline. Massie has easily beat back challenges before, including a raft of money from pro-Israel donors. But this time, the six-term Congressman's strong independent political brand may not withstand the blitz that the president's allies appear ready to unleash. Not only has Trump vowed to campaign 'really hard' against Massie next year, his political operation has launched a super PAC dedicated solely to defeating the Kentuckian. 'He's probably more vulnerable than he's been since he first won in a primary because of all this,' said GOP strategist and former Kentucky state Rep. Adam Koenig. 'There's money outside of Trump world ready to go after Massie.' Trump's political apparatus began ramping up its efforts to boot Massie after the representative voted against the party's massive tax-and-spending package for the president's domestic policy priorities when it first went through the House last month. It went public with its plans — a super PAC dubbed Kentucky MAGA led by two of the president's most-trusted lieutenants, Chris LaCivita and pollster Tony Fabrizio, first reported by Axios — as Massie pushed to reassert congressional authority over Trump's military actions in Iran. 'He has established himself as a contrarian for contrarian sake,' LaCivita said in a text message to POLITICO. 'He should be a man and switch parties instead of posing as a Republican.' The president and his advisers have viciously attacked Massie on social media in recent days, with Trump marshalling his MAGA base to dump 'LOSER' Massie and 'GET THIS 'BUM' OUT OF OFFICE.' Trump and Massie have had a contentious relationship dating back to the president's first term, when he pushed to 'throw Massie out of the Republican Party' after the Kentucky Republican erected a roadblock to Trump's Covid-19 relief package in March 2020. Trump later endorsed Massie's 2022 reelection bid and Massie backed Trump in 2024 — but only after initially supporting Florida Gov. Ron DeSantis in the presidential primary. But now that Trump is back in the Oval Office, Massie has attempted to cripple the president's legislative agenda multiple times, including becoming the only Republican to vote against a stopgap government funding bill in March. Unlike in the past, the president appears to be making good on his threats to try getting Massie out of office by putting a super PAC on the case. 'I think there's a real opportunity…they're going to spend upwards of $30 million to defeat Thomas Massie,' said one Kentucky GOP political operative who, like many interviewed for this story, was granted anonymity to discuss sensitive intraparty matters. The operative, who did not vote for Trump, also heard rumblings that AIPAC, one of the most prominent pro-Israel groups, is also ready to spend big in the May 2026 Kentucky primary — suggesting Massie's anti-war efforts may be met with resistance on multiple fronts. Some Republican strategists estimate combined spending could reach as high as $45 million, an unheard of total for a primary contest in the 4th Congressional District. (The only outside spending against Massie in last year's primary was about $320,000 from AIPAC's super PAC, United Democracy Project.) Even Speaker Mike Johnson hedged Tuesday on whether he would support Massie next year — despite acknowledging it's his job as the top House Republican to protect his party's incumbents. 'I certainly understand the president's frustration' with Massie, Johnson told reporters at the Capitol. 'If you're here and you're wearing one team's jersey and every single time you vote with the other team, people begin to question … why you're so consistently opposed to the platform, the agenda of your party.' But Massie appears unfazed by Trump and his allies' electoral threats. 'In 2020 I got my Trump antibodies from a natural infection when he came after me, and I survived,' Massie quipped to reporters on Tuesday. 'It will deplete his political capital if he doesn't succeed, and he knows that. So that's got to be part of his calculus.' In fact, Massie is embracing the fight. On Twitter, he teased an interview with podcaster Theo Von, a sign that he's seeking to widen his exposure in a format that favors Massie's unique brand of an isolationist budget hawk. He's fundraising off the social-media sparring with Trump, telling Hill reporters Monday evening that he'd raised roughly $120,000 in 24 hours. And he's still pledging to move ahead with his war powers resolution if the ceasefire between Iran and Israel doesn't hold, saying in television interviews and to Hill reporters it's 'not clear the war is over.' Overhanging the primary threat is the question of exactly which candidate Trump's allies have in mind to run against the incumbent. Already, some think first-term state Rep. Aaron Reed, a retired Navy Seal and gun shop owner who is rarely seen without his cowboy hat, would be a possible challenger. Another option is state Rep. Kimberly Moser, who is not thought of as traditionally MAGA, but has over the years made inroads with the Trump wing of the party. There are some potential outsiders who might have the means to self-fund a campaign as well, like political pundit Scott Jennings or former gubernatorial candidate Kelly Craft. 'I think it's too soon to know if his outright opposition to what Trump has done – and I think it's pretty horrible what [Massie's] done – will make a difference,' said Ellen Williams, a former chair of the Kentucky GOP. 'You can't just put anybody up against him and spend a shitload of money. I just think it emboldens him.' Members of Kentucky's congressional delegation say Massie's sprawling district, which runs along the northern border along Ohio and Indiana and stretches from the southern Cincinnati suburbs to the outer bands of the Louisville metro area, is a unique cross-section of the state that appears to relish Massie's independent streak. It's home to some of the most prominent members of the 'liberty faction' of the Kentucky Republican Party, a group that embraces Trump while also gravitating toward libertarian-leaning Republicans like Massie and Kentucky Sen. Rand Paul. The senator has weathered his own barrage of attacks from Trump for voicing opposition to the megabill and defended Massie to POLITICO on Tuesday. Massie is 'very popular in Kentucky,' Paul said. 'I will continue to support him.' 'His district is different,' Rep. James Comer, a fellow Kentucky Republican, said Tuesday on Capitol Hill, though he declined to weigh in on the conflict between Massie and Trump. 'That's a unique congressional district.' Former Kentucky Secretary of State Trey Grayson believes Trump, as much as he is the undisputed leader of the Republican Party, may be overplaying his hand when it comes to Massie's district. 'As popular as Trump is in Republican politics, as popular as Trump is in Kentucky, as popular as Trump is in the 4th District, on the substance, on the policy, Thomas wins those arguments over Trump,' Grayson said. 'Until you see someone step up, Thomas is still pretty formidable.' He also warned of repercussions for Trump, who — constitutionally barred from seeking office again — is a lame duck. If the representative is able to fend off a primary challenge, it could open the floodgates for others who have private misgivings about the president's actions. 'It will make a difference if Massie were to overcome this,' Grayson added. 'If he wins, if you're a member, you'd be more likely to speak out in the future.' Massie's never been in serious jeopardy in the GOP primary. His closest primary contest was when he first ran for Congress in 2012 when he defeated Alecia Webb-Edgington, a state representative, to succeed the retiring Rep. Geoff Davis by roughly 7,000 votes. In subsequent primary contests, Massie cruised to victory in otherwise low-turnout primaries where he won with no less than 60 percent of the vote. Many operatives believe Trump would need to juice primary turnout considerably to succeed in his quest to topple Massie. Some cautioned that Trump's popularity 11 months from now could shift considerably. Massie was matter-of-fact about the challenges before him Tuesday afternoon when addressing reporters. 'I just have to spend more money if he gets in the race,' Massie said, when asked his thoughts on Trump meddling in his primary. He then laid out a pair of scenarios, one in which Trump endorses someone and then backtracks on the endorsement — as the president has done before. He floated another in which Trump's allies lay down a lot of money and groundwork, only to abandon its efforts down the line. 'They're gonna try to talk to somebody in the them that the Trump endorsement is coming, and then they'll wait to see if that person can get close. And if that person can get close, then Trump may get in,' Massie said. 'If that person can't, they'll leave that person hanging on the bone.'

KBH Q2 Deep Dive: Lower Guidance and Market Headwinds Shape 2025 Outlook
KBH Q2 Deep Dive: Lower Guidance and Market Headwinds Shape 2025 Outlook

Yahoo

time15 minutes ago

  • Yahoo

KBH Q2 Deep Dive: Lower Guidance and Market Headwinds Shape 2025 Outlook

Homebuilder KB Home (NYSE:KBH) reported revenue ahead of Wall Street's expectations in Q2 CY2025, but sales fell by 10.5% year on year to $1.53 billion. On the other hand, the company's full-year revenue guidance of $6.4 billion at the midpoint came in 2.4% below analysts' estimates. Its GAAP profit of $1.51 per share was 2.7% above analysts' consensus estimates. Is now the time to buy KBH? Find out in our full research report (it's free). Revenue: $1.53 billion vs analyst estimates of $1.51 billion (10.5% year-on-year decline, 1.6% beat) EPS (GAAP): $1.51 vs analyst estimates of $1.47 (2.7% beat) Adjusted EBITDA: $144.9 million vs analyst estimates of $164.2 million (9.5% margin, 11.8% miss) The company dropped its revenue guidance for the full year to $6.4 billion at the midpoint from $6.8 billion, a 5.9% decrease Operating Margin: 8.8%, down from 11.4% in the same quarter last year Backlog: $2.29 billion at quarter end, down 26.7% year on year Market Capitalization: $3.82 billion KB Home's second quarter results for 2025 were met with a negative market reaction, as several evolving market headwinds weighed on performance. Management pointed to subdued demand during the spring selling season, with CEO Jeffrey Mezger citing that "affordability challenges have persisted compounded by the variability in mortgage interest rates, which remain elevated as well as macroeconomic and geopolitical uncertainty." Operationally, the company highlighted faster build times and reduced direct costs as partial offsets, but acknowledged that consumer caution and higher resale inventory pressured new order volumes and operating margins. Looking ahead, KB Home's reduced full-year guidance reflects management's expectations for continued softness in homebuyer demand and ongoing margin pressures. The company aims to align its cost structure with lower volumes, while maintaining flexibility to adjust pricing and production pace by community. President Rob McGibney noted that "our strategy focuses on delivering the most compelling value and improving affordability with transparency," but also acknowledged the risk of continued demand weakness if mortgage rates and consumer confidence do not improve. Management signaled an intent to prioritize operational efficiency and shareholder returns as they navigate this uncertain environment. Management attributed second quarter performance to faster build times and cost controls, but noted that consumer confidence and affordability remain key challenges impacting order flow and revenue outlook. Build times improved: The company reduced average build times by 7 days quarter-over-quarter, returning to pre-pandemic levels. Management believes this operational gain allows for quicker inventory turnover and the ability to close more homes within the year, supporting delivery targets even as demand softens. Sales strategy adjustments: KB Home shifted away from offering incentives and instead focused on adjusting base pricing at the community level. While this approach drove strong net orders in March, management reported a decline in April and May as consumers grew more apprehensive about the economy and mortgage rates. 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Management expects near-term performance to be shaped by cautious consumer sentiment, affordability pressures, and disciplined cost management strategies. Sustained affordability challenges: Elevated mortgage rates and higher resale inventory continue to weigh on buyer confidence, leading management to anticipate subdued order volumes and a slower absorption pace in the coming quarters. The company's pricing strategy remains flexible in response to local market dynamics. Margin and cost discipline: Operating margins are expected to be pressured by reduced pricing power, less favorable regional mix, and higher land costs. Management is targeting further reductions in build times and overhead expenses to help offset these headwinds and maintain profitability. Shareholder return focus: With lower land investment planned for the remainder of the year, KB Home intends to accelerate share repurchases, supported by a strong balance sheet and liquidity. Management views this as a means to enhance earnings per share and return on equity in a challenging market backdrop. In the quarters ahead, the StockStory team will monitor (1) the pace of net order recovery as consumer sentiment and mortgage rates evolve, (2) the company's ability to sustain further reductions in build times and direct costs, and (3) the effectiveness of its strategy to moderate land investment while maintaining a robust pipeline for future community growth. Execution on pricing flexibility and inventory management will also be important indicators of operational resilience. KB Home currently trades at $52.87, in line with $53.36 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it's free). Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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