What changed in this filing

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Item 1. Business

2025-01-24 compared with 2024-01-19 · 761 added, 387 removed, 85 unchanged (93% of the section changed)

KB Home is one of the largest and most recognized homebuilding companies in the U.S.

We have been building homes for more than 65 years, with over 680,000 homes built since our founding in 1957.

We build a variety of new homes, including attached and detached single-family residential homes, townhomes and condominiums, designed primarily for first-time and first move-up, as well as second move-up and active adult, homebuyers.

We offer homes in development communities, at urban in-fill locations and as part of mixed-use projects.

Our homebuilding operations represent the majority of our business, accounting for 99.5% of our total revenues in 2023.

Our financial services operations, which accounted for the remaining .5% of our total revenues in 2023, offer various insurance products to our homebuyers in the markets where we build homes and provide title services in certain of those markets.

Our financial services operations also provide mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans, LLC (“KBHS”), an unconsolidated joint venture between us and a third party.

Unless the context indicates otherwise, the terms “we,” “our” and “us” used in this report refer to KB Home, a Delaware corporation, and its predecessors and subsidiaries.

We also use the following terms in our business with the corresponding meanings:

KB Home is one of the largest and most trusted homebuilders in the U.S.

We have been building homes for more than 65

years, with nearly 700,000 homes built since our founding in 1957.

We build a variety of new homes, including attached and

detached single-family residential homes, townhomes and condominiums, designed primarily for first-time and first move-up,

as well as second move-up and active adult, homebuyers.

We offer homes in development communities, at urban in-fill

locations and as part of mixed-use projects.

Our homebuilding operations represent the majority of our business, accounting for

99.6% of our total revenues in 2024 .

Our financial services operations, which accounted for the remaining .4% of our total

revenues in 2024 , offer various insurance products to our homebuyers in the markets where we build homes and provide title

services in certain of those markets.

Our financial services operations also provide mortgage banking services, including

residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans,

LLC (“ KBHS ”), an unconsolidated joint venture between us and a third party.

Unless the context indicates otherwise, the terms “we,” “our” and “us” used in this report refer to KB Home, a Delaware

corporation, and its predecessors and subsidiaries.

We also use the following terms in our business with the corresponding

“home” is a single-family residence, whether it is a single-family home or other type of residential property;

“homes delivered” are homes for which the sale has closed and title has passed to a customer;

“community” is a single development in which new homes are constructed as part of an integrated plan;

“community count” is the number of communities we have open for sales with at least five homes/lots left to sell;

and “product” encompasses a home’s floor plan design and interior/exterior style, amenities, functions and features.

The following charts present homebuilding revenues, net income and diluted earnings per share for the years ended November 30, 2019, 2021 and 2023, and book value per share as of November 30, 2019, 2021 and 2023:

Reflecting the geographic span of our homebuilding business, we have operations in the nine states and 47 major markets presented below.

delivered” are homes for which the sale has closed and title has passed to a customer;

“community” is a single development in

which new homes are constructed as part of an integrated plan;

“community count” is the number of communities we have open

for sales with at least five homes/lots left to sell;

and “product” encompasses a home’s floor plan design and interior/exterior

style, amenities, functions and features.

The following charts present homebuilding revenues, net income and diluted earnings per share for the years ended

November 30, and book value per share as of November 30 :

Reflecting the geographic scale of our homebuilding business, we have operations in the nine states and 49 major markets

presented below.

We also operate in various submarkets within these major markets.

We may refer to these markets and submarkets collectively as our “served markets.” For reporting purposes, we organize our homebuilding operations into four segments — West Coast, Southwest, Central and Southeast.

Segment States Major Market(s)

West Coast California Contra Costa County, Fresno, Hollister, Los Angeles, Madera, Modesto, Oakland, Orange County, Riverside, Roseville, Sacramento, Salinas, San Bernardino, San Diego, San Francisco, San Jose, Santa Rosa-Petaluma, Stockton, Vallejo, Ventura and Yuba City

Washington Olympia and Seattle

Southwest Arizona Phoenix and Tucson

Nevada Las Vegas

Central Colorado Denver, Erie, Firestone and Loveland

Texas Austin, Dallas, Fort Worth, Houston and San Antonio

Southeast Florida Fort Myers, Jacksonville, Lakeland, Melbourne, Orlando, Palm Coast, Sarasota and Tampa

North Carolina Charlotte, Durham-Chapel Hill and Raleigh

We may refer to these markets and

submarkets collectively as our “served markets.” For reporting purposes, we organize our homebuilding operations into four

segments — West Coast , Southwest, Central and Southeast.

Major Market(s)

Contra Costa County, Fresno, Hollister, Los Angeles, Madera, Modesto, Oakland, Orange

County, Riverside, Roseville, Sacramento, Salinas, San Bernardino, San Diego, San

Francisco, San Jose, Santa Rosa-Petaluma, Stockton, Vallejo, Ventura and Yuba City

Bremerton, Olympia and Seattle

Phoenix and Tucson

Denver, Erie, Firestone and Loveland

Austin, Dallas, Fort Worth, Houston and San Antonio

Fort Myers, Jacksonville, Lakeland, Melbourne, Orlando, Palm Coast, Sarasota and Tampa

North Carolina

Charlotte, Durham-Chapel Hill, Fayetteville and Raleigh

Business Strategy

Our core business strategy, which we refer to as KB Edge, is to expand our scale primarily within our current geographic footprint to achieve a top-five position in each of our served markets (based on homes delivered).

KB Edge is a systematic, fact-based and process-driven approach to homebuilding that is grounded in gaining a detailed understanding of consumers’ location and product preferences and product price-to-value perceptions.

KB Edge consists of the following key principles with respect to customers, land, products and operations:

Our core business strategy, which we refer to as KB Edge , is to expand our operations primarily within our

current geographic footprint to achieve a top-five position in each of our served markets (based on homes delivered).

is a systematic, fact-based and process-driven approach to homebuilding that is grounded in gaining a detailed understanding of

consumers’ location and product preferences and product price-to-value perceptions.

KB Edge consists of the following key principles with respect to customers, land, products and production:

• Customers .

With our Built to Order® homebuying process, we provide each of our homebuyers with a highly personalized experience where they can make a wide range of structural and design choices for their future new home, as discussed further below under “Customer Obsession.” We believe this highly interactive, “customer-first” experience that puts our homebuyers firmly in control of designing the home they want based on what they value and how they want to live, at a price they can afford, gives us a meaningful and distinct competitive advantage over other homebuilders and resale and rental homes.

In addition, we find our homebuyers can have a strong emotional attachment to our products when they create a personalized home with the features and finishes they select.

We seek to manage our working capital and reduce our operating risks by primarily acquiring entitled land parcels within attractive submarkets identified by our market research.

We typically focus on metropolitan areas with favorable long-term economic and population growth prospects, and target land parcels that meet our investment return standards.

We focus on investments that provide a one- to three-year supply of land or lots per product line, per community, and individual assets that are generally between 50 to 300 lots in size.

Our land investment is sensitive to and will shift with local or national housing market environments or broader economic conditions, generally increasing when we are experiencing or expecting strong growth and decreasing when we are experiencing or expecting slower growth.

Though we evaluate new markets to enter, our primary focus is on our existing geographic footprint.

We leverage the relationships we have with landowners, developers and brokers to find and acquire land parcels, and use our experience in working with municipalities to efficiently obtain development approvals.

We offer our customers a variety of homes with a standardized set of functions and features generally priced to be affordable for those with household incomes within a range of the local area’s median level, with the goal of being attainable for the largest demand segments.

With our Built to Order approach, our customers have the opportunity to select their lot location within a community, floor plan, elevation and structural options, each of which may be at a premium added to a home’s selling price, and to personalize their homes beyond our base offerings by adding numerous design options and upgrades available in our KB Home Design Studios.

Our design studios, generally centrally located within our served markets, are a key component of our Built to Order process, with the mix of design options and upgrades we offer at each studio primarily based on the preferences identified by our market survey and purchase frequency data, as discussed further below under “Customer Obsession.” We utilize a centralized internal architectural group that designs homes to meet or exceed customers’ price-to-value expectations while being as efficient as possible to construct.

To enhance the simplicity and efficiency of our products and processes, our architectural group has developed a core series of high-frequency, flexible floor plans and elevations that we can offer across many of our served markets.

Our library of standardized plans facilitates our ability to shift with local demand, which may include adding smaller square footage homes at communities to offer more affordable choices to buyers, and/or project site attributes, such as the size and location of developable lots.

This library also enables us to better understand in advance the cost to build our products and to compare and implement best land development and home construction practices across divisions and communities.

We also incorporate energy-efficient features into our product designs to help lower our homebuyers’ total cost of homeownership and reduce our homes’ impact on the environment, as discussed below under “Environmental, Social and Governance.”

• Operations .

In addition to differentiating us from other high-production homebuilders, our Built to Order process helps drive low-cost production.

We generally commence construction of a home only after we have a signed purchase contract with a homebuyer and have obtained preliminary credit approval or other evidence of the homebuyer’s financial ability to purchase the home, and seek to build a backlog of sold homes.

To help moderate construction-related cost inflation, we, to the extent practicable, enter into fixed-price contracts with our larger trade partners and building material suppliers for specified periods of time.

By maintaining a substantial backlog, along with centralized scheduling and standardized reporting processes, we have established a disciplined and scalable operational platform that helps us sustain an even-flow production of pre-sold homes.

This reduces our inventory risk, promotes construction efficiencies, enhances our relationships with independent contractors and other business partners, and provides us with greater visibility and predictability on future deliveries.

There have been and may in future periods be circumstances where we deviate from certain of the above principles.

These include starting construction on a certain number of homes in a community before corresponding purchase contracts are signed with homebuyers to more quickly meet customer delivery expectations and generate revenues, particularly in markets with low resale home inventory, as we saw during 2023.

Generally, we target having roughly 65% to 70% Built to Order homes in production, with the remainder consisting of homes started without a corresponding buyer and partially constructed homes where the initial buyer cancelled their home sales contract with us.

We may also acquire land parcels in peripheral neighborhoods of a core metropolitan area that otherwise fit our growth strategy and meet our investment return standards.

Significant supply chain disruptions beginning in 2020, primarily due to the 2019 coronavirus disease (“COVID-19”) pandemic and related public health control efforts, substantially lengthened our average construction cycle time and hindered our even-flow home production process into 2023.

During this period, we experienced building materials and construction services

shortages, delays with respect to state and municipal permitting, inspection and utility processes, unpredictable shipment schedules and other issues that prompted us to revise the sequencing of construction steps from time to time and, in some cases, order items in advance of starting a home to mitigate delays.

In 2023, we achieved a meaningful sequential improvement in our construction cycle times each quarter beginning with the second quarter, driven by a stabilizing supply chain and improved construction services availability, as well as our ongoing initiative to simplify our product offerings, particularly our design options and upgrades.

Similar and other circumstances could arise that may lead us to make specific short-term shifts from our KB Edge principles.

With our Built to Order ® homebuying process, we provide each of our homebuyers with a highly

personalized experience where they can make a wide range of structural and design choices for their future new home,

as discussed further below under “ Customer Obsession .” We believe this highly interactive, “customer-first”

experience that puts our homebuyers firmly in control of designing the home they want based on what they value and

how they want to live, at a price they can afford, gives us a meaningful and distinct competitive advantage over other

homebuilders and resale and rental homes.

In addition, we find our homebuyers build a strong emotional attachment

to our products when they create a personalized home with the features and finishes they select.

We seek to manage our working capital and reduce our operating risks by primarily acquiring entitled land

parcels within attractive submarkets identified by our market research.

We typically focus on metropolitan areas with

favorable long-term economic and population growth prospects, and target land parcels that meet our investment

return standards.

We focus on investments that provide a one- to three-year supply of land or lots per product line, per

community, and individual assets that are generally between 50 to 300 lots in size .

Our land investment is sensitive to

and will shift with local or national housing market environments or broader economic conditions, generally increasing

when we are experiencing or expecting strong growth and decreasing when we are experiencing or expecting slower

We leverage the relationships we have with landowners, developers and brokers to find and acquire land

parcels, and use our experience in working with municipalities to efficiently obtain development approvals.

We offer our customers a variety of homes with a standardized set of functions and features generally priced

to be affordable for those with household incomes within a range of the local area’s median level, with the goal of

being attainable for the largest demand segments.

With our Built to Order approach, our customers have the

opportunity to select their lot location within a community, floor plan, elevation and structural options, each of which

may be at a premium added to a home’s selling price, and to personalize their homes beyond our base offerings by

adding numerous design choices and options available in our KB Home Design Studios .

Our design studios, generally

centrally located within our served markets, are a key component of our Built to Order process, with the mix of design

choices and options we offer at each studio primarily based on the preferences identified by our market survey and

purchase frequency data, as discussed further below under “ Customer Obsession .”

We utilize a centralized internal architectural group that designs homes to meet or exceed customers’ price-to-value

expectations while being as cost-effective as possible to construct.

To enhance the simplicity and efficiency of our

products and processes, our architectural group has developed a core series of high-frequency, flexible floor plans and

elevations that we can offer across many of our served markets, which it periodically updates to incorporate value-

engineering enhancements, regulatory requirements and/or evolving consumer tastes.

Our library of standardized

plans facilitates our ability to shift with local demand, which may include adding smaller square footage homes at

communities to offer more affordable choices to buyers, and/or project site attributes, such as the size and location of

developable lots.

This library also enables us to better understand in advance the cost to build our products and to

compare and implement best land development and home construction practices across divisions and communities.

We also incorporate energy-efficient and water-saving f eatures into our product designs to help lower our homebuyers’

total cost of homeownership and reduce our homes’ impact on the environment.

• Production .

In addition to differentiating us from other high-production homebuilders, our Built to Order process

helps drive low-cost production.

We generally commence construction of a home only after we have a signed

purchase contract with a homebuyer and have obtained preliminary credit approval or other evidence of the

homebuyer’s financial ability to purchase the home, and seek to build a backlog of sold homes.

To help moderate

construction-related cost inflation, we, to the extent practicable, enter into fixed-price contracts with our larger trade

partners and building material suppliers for specified periods of time.

By maintaining a substantial backlog, along

with centralized scheduling and standardized reporting processes, we have established a disciplined and scalable

operational platform that helps us sustain an even-flow production of pre-sold homes.

This reduces our inventory risk,

promotes construction efficiencies, enhances our relationships with independent contractors and other business

partners, and provides us with greater visibility and predictability on future deliveries.

There have been and may in future periods be circumstances where we deviate from certain of the above principles, such as

starting construction on a certain number of homes in a community before corresponding sales contracts are signed with

homebuyers to more quickly meet customer delivery expectations and generate revenues, particularly in markets with low

resale home inventory.

Generally, 60% to 70% of our homes delivered are Built to Order , with the remainder consisting of

homes started without a corresponding buyer and partially constructed homes where the initial buyer cancelled their home sales

contract with us.

We may also acquire land parcels in peripheral neighborhoods of a core metropolitan area that otherwise fit

our growth strategy and meet our investment return standards.

Additionally, significant supply chain disruptions from 2020

into 2023 substantially lengthened our average build time and hindered our even-flow home production process.

We achieved a

meaningful sequential improvement in our build times each quarter beginning with the 2023 second quarter.

Our average build

times in 2024 improved 28% from the prior year and as of the end of the 2024 fourth quarter , our build times had nearly

returned to their historical average of between four to five months from start to home completion .

Asset Efficiency.

In implementing our KB Edge business strategy, a key tenet of our approach is to enhance asset efficiency.

We do this by calibrating home sales rates and selling prices at each of our communities to improve profitability;

focusing on controlling direct construction costs;

In implementing our KB Edge business strategy, a key focus is on enhancing asset efficiency.

by calibrating home sales rates and selling prices at each of our communities to improve profitability;

focusing on controlling

direct construction costs;

increasing inventory turns to the extent practical;

balancing pace, price and construction starts at each community to optimize our return on each inventory asset within its market context;

structuring land acquisitions to minimize upfront costs where possible, as discussed below under “Community Development and Land Inventory Management”;

and deploying excess cash flow from operations to help fuel additional revenue growth or reduce debt, among other steps.

balancing pace, price and construction starts at each

community to optimize even-flow production and our return on each inventory asset within its market context;

structuring land

acquisitions to minimize upfront costs where possible, as discussed below under “ Community Development and Land

Inventory Management ”;

and deploying excess cash flow from operations to help fuel additional revenue growth or reduce

debt, among other steps.

Customer Obsession .

We believe the best new homes start with the people who will live in them.

Our customer-centric approach comes from a deep-rooted operational philosophy and company culture motivated by a paramount objective:

to be the most customer-obsessed homebuilder in the world.

Driven by this ambition, our team seeks to provide a compelling, simple and personalized homebuying process distinguished by phenomenal customer service.

We want our customers to know they have a real partner when buying a home with us and feel that once their home is built, they can see themselves in their new home.

Our team members, supported through our training and development programs, are encouraged to make decisions intended to produce the best results for our customers and our organization.

Our customer obsession mindset is built around the following key principles:

Our customer-centric

approach comes from a deep-rooted operational philosophy and company culture motivated by a paramount objective:

most customer-obsessed homebuilder in the world.

Driven by this ambition, our team seeks to provide a compelling, simple

and personalized homebuying process distinguished by phenomenal customer service.

We want our customers to know they

have a real partner when buying a home with us and feel that once their home is built, they can see themselves in their new

Our team members, supported through our training and development programs, are encouraged to make decisions

intended to produce the best results for our customers and our organization.

Our customer obsession mindset is built around the

following key principles:

• Find out what customers actually want .

We ascertain homebuyer product design and location preferences partly through surveys we conduct of recent buyers of both new and resale homes across our served markets.

We also obtain data from our own homebuyers’ selections and post-sale feedback.

We use this information on what matters most to homebuyers when making purchase and trade-off decisions to develop and refine our product offerings, as well as our land acquisition targets.

We also cultivate and leverage close supplier and business partner relationships to integrate into or offer with our products architectural elements, building materials, construction techniques, structural and non-structural systems, and components and devices that are aligned with the preferences identified in our surveys and other data sources.

We ascertain homebuyer product design and location preferences partly

through surveys we conduct of recent buyers of both new and resale homes across our served markets.

We also obtain

data from our own homebuyers’ selections and post-sale feedback.

We use this information on what matters most to

homebuyers when making purchase and trade-off decisions to develop and refine our product offerings, as well as our

land acquisition targets.

We also cultivate and leverage close supplier and business partner relationships to integrate into or offer with our

products architectural elements, building materials, construction techniques, structural and non-structural systems, and

components and devices that are aligned with the preferences identified in our surveys and other data sources.

• Offer customers choice and control .

From our synthesis of the foregoing consumer research and related activities, we give our homebuyers a wide array of choices to craft the new home that fits their particular lifestyle and priorities, including their homesite, floor plan, elevation and structural options.

Our homebuyers can visit our KB Home Design Studios, where they get both advice and the opportunity to select from a broad range of included features, design options and upgrades that will help personalize their home.

When customers build a new home with us, they also enjoy choosing exactly what they want and paying only for what matters most to them.

This helps to meet homebuyers’ priorities at price points attainable to them.

From our synthesis of the foregoing consumer research and related activities, we

give our homebuyers a wide array of choices to craft the new home that fits their particular lifestyle and priorities,

including their homesite, floor plan, elevation and structural options.

Our homebuyers can visit our KB Home Design

Studios , where they get both advice and the opportunity to select from a broad range of inc luded features, design

choices and options that will help personalize their home.

When customers build a new home with us, they also enjoy

choosing exactly what they want and paying only for what matters most to them.

This helps to meet homebuyers’

priorities at price points attainable to them.

• Create collaborative customer relationships .

In our view, we are not just selling a house.

We are in the business of delivering an exceptional, personalized experience that enables our customers to achieve perhaps the most meaningful purchase they will ever make and an important landmark in their life’s journey — their own home.

From this perspective, we strive to form close relationships with our homebuyers.

We endeavor to learn key details about what they want, their top priorities today and where they see themselves in the future, so we can co-create a home for their day-to-day lives.

We support each person or family, whether it is their first time or they have already been homeowners, with a dedicated community team of sales counselors, design consultants, construction supervisors and other personnel.

This team is available to guide each homebuyer through each major step of the design, construction and closing of their KB home and aims to make the process as easy and straightforward as possible.

We are in the business of

delivering an exceptional, personalized experience that enables our customers to achieve perhaps the most meaningful

purchase they will ever make and an important landmark in their life’s journey — their own home.

perspective, we strive to form close relationships with our homebuyers.

We endeavor to learn key details about what

they want, their top priorities today and where they see themselves in the future, so we can co-create a home for their

day-to-day lives.

We support each person or family, whether it is their first time or they have already been

homeowners, with a dedicated community team of sales counselors, design consultants, customer service

representatives, construction superintendents and other personnel.

This team is available to guide each homebuyer

through each major step of the design, construction and closing of their KB home and aims to make the process as easy

and straightforward as possible.

• Continue to listen to customers after the sale is done .

To help learn and improve our customer experience, we schedule follow up visits with our customers 30 days after they move in, as well as three, six, 10 and 18 months later, to hear about their experience in their new home and to address any concerns they may have, including warranty claims.

Information about our KB Home 10-year Limited Warranty program is provided in Note 17 – Commitments and Contingencies in the Notes to Consolidated Financial Statements in this report.

We believe our approach differentiates us in the homebuilding industry and, along with our company culture that sustains it, enhances customer satisfaction.

We are proud of the high levels of satisfaction our homebuyers have reported to us and outside survey firms.

In 2023, we continued to be one of the highest-ranked national homebuilders for customer satisfaction in third-party surveys, which we believe reflects the effective dedication we have to our homebuyers.

To help learn and improve our customer experience, we

schedule follow-up visits with our customers 1 0 days and 30 day s after they move in, as well as six, 10 and 18 months

later , to hear about their experience in their new home and to address any concerns they may have, including warranty

Information about our KB Home 10-year Limited Warranty program is provided in Note 17 – Commitments

and Contingencies in the Notes to Consolidated Financial Statements in this report.

We believe our approach differentiates us in the homebuilding industry and, along with our company culture that sustains

it, enhances customer satisfaction.

We are proud of the high levels of satisfaction our homebuyers have reported to us and

outside survey firms.

In 2024, we continued to be one of the highest-ranked national homebuilders for customer satisfaction in

third-party surveys and, based on long-running buyer surveys conducted by an outside organization we have engaged, achieved

the highest level of customer satisfaction in our histor y , which we believe reflects the effective dedication we have to our

Promotional Marketing Strategy.

To emphasize the distinct combination of innovative design, sustainability, personalization, affordability and partnership we offer to our homebuyers and the importance we place on customer satisfaction, we have centered our external brand identity and messaging around Built on Relationships®.

Built on Relationships also encapsulates the importance of customer, as discussed above, and other key relationships – with suppliers, trade contractors, land sellers and municipalities – to the success of our business.

The key components we highlight as part of our brand identity include:

To emphasize the distinct combination of innovative design, sustainability,

personalization, affordability and partnership we offer to our homebuyers and the importance we place on customer satisfaction,

we have centered our external brand identity and messaging around Built on Relationships®.

Built on Relationships also

encapsulates the importance of customer, as discussed above, and other key relationships – with suppliers, trade contractors,

land sellers and municipalities – to the success of our business.

The key components we highlight as part of our brand identity

• Partnership .

Our dedicated team of sales counselors, design consultants, construction superintendents and customer

service representatives, as well as KBHS loan officers, work closely with our customers throughout the homebuying

• Personalization .

We give our homebuyers the ability to personalize their new home from floor plans to exterior styles,

and from design choices to where they live in the community.

Additionally, at our KB Home Design Studios , our

homebuyers have the opportunity to select from a broad range of included features, design choices and options.

• Innovative Design .

We believe we offer homebuyers product designs that distinctively blend contemporary consumer-preferred elements, such as open floor plans, flexible living spaces, indoor/outdoor flow and extra storage;

quality construction standards;

and advanced technological features and devices, as compared to some other new and resale homes.

We believe we offer homebuyers product designs that distinctively blend contemporary consumer-

preferred elements, such as open floor plans, flexible living spaces, indoor/outdoor flow and extra storage;

construction standards;

and advanced technological features and devices, as compared to some other new and resale

• Sustainability .

Our homes are engineered to be highly energy efficient and include features that support healthier indoor environments.

Our homes are designed to be ENERGY STAR® certified — a standard that fewer than 10% of new homes nationwide meet — offering greater comfort, well-being and utility cost savings than new homes without certification.

• Personalization .

We give our homebuyers the ability to personalize their new home from floor plans to exterior styles, and from design choices to where they live in the community.

Additionally, at our KB Home Design Studios, our homebuyers have the opportunity to select from a broad range of included features, design options and upgrades.

Our homes are engineered to be highly energy and water efficient, as discussed further below.

• Affordability .

In addition, in many of our communities, we can readily introduce smaller square footage floor plans to enable more customers to select and design a personalized home within their budget.

Our ENERGY STAR certified homes can provide long-term significant savings on utility bills, compared to typical resale homes and to competitive new homes that are not ENERGY STAR certified.

• Partnership .

Our dedicated team of sales counselors, design consultants, construction superintendents and customer service representatives, as well as KBHS loan officers, work closely with our customers throughout the homebuying process.

We typically sell our homes through salaried and/or commissioned sales associate employees from sales offices located in or adjacent to furnished model homes in each community, or through outside brokers.

We also use electronic sales capabilities and technology to give our customers a variety of convenient ways to shop for and purchase a new KB home, including, among other things:

We offer our customers a variety of homes with a standardized set of functions and features generally

priced to be affordable for those with household incomes within a range of the local area’s median level.

in many of our communities, we can readily introduce smaller square footage floor plans to enable more customers to

select and design a personalized home within their budget.

Our ENERGY STAR ® certified homes can provide long-

term significant savings on utility bills, compared to typical resale homes and new homes that are not ENERGY STAR

We typically sell our homes through salaried and/or commissioned sales associate employees from sales offices located in

or adjacent to furnished model homes in each community, or through outside brokers.

We also use electronic sales capabilities

and technology to give our customers a variety of convenient ways to shop for and purchase a new KB home, including, among

other things:

• Offering virtual home tours and online photo galleries for prospective homebuyers;

2 unchanged sentences

• Utilizing online tools to serve homebuyers where possible;

• Organizing virtual events with the broker community to introduce new communities;

• Presenting homebuyers with the ability to virtually see and walk through their home at various points during its construction and prior to closing;

• Arranging virtual or drive-through closings, where permitted.

In addition, as part of our commitment to sustainability, which is discussed further below under “Environmental, Social and Governance,” and providing our customers a simple path to homeownership, we continue to work towards the goal of paperless homebuying.

Over the past several years, we have eliminated a significant amount of paper from our home sales contract by reducing the number of forms required to complete the process and digitizing as many of the remaining forms as possible.

We market our homes to prospective homebuyers and real estate brokers through a variety of media, and use data analytics to target our advertising and measure its effectiveness and efficiency in terms of generating leads and orders.

In recent years and in response to the growing number of millennial and Generation Z homebuyers, we have increased our emphasis on digital marketing, through search engine marketing, interactive internet-based applications, email, social media, our website and other evolving communication technologies.

• Presenting homebuyers with the ability to virtually see and walk through their home at various points during its

construction and prior to closing.

We market our homes to prospective homebuyers and real estate brokers through a variety of media, and use data analytics

to target our advertising and measure its effectiveness and efficiency in terms of generating leads and orders.

In recent years

and in response to the growing number of millennial and Generation Z homebuyers, we have increased our emphasis on digital

marketing, through search engine marketing, interactive internet-based applications, email, social media, our website and other

evolving communication technologies.

We also use print media and advertising, billboards and radio in our served markets.

Homebuyer Profile .

Our product portfolio for customers ranges from smaller, higher density homes, with average selling prices typically suited for first-time homebuyers, to larger homes in premium locations with additional amenities and higher average selling prices that generally attract a first or second move-up homebuyer.

We also offer a variety of single-story floorplans that typically appeal to an active adult homebuyer age 55 and over.

For more than a decade, first-time and first move-up homebuyers have accounted for an average of over 75% of our annual deliveries;

in 2023, these homebuyers accounted for 74% of our deliveries, as shown in the following chart:

Our product portfolio for customers ranges from smaller, higher density homes, with average selling

prices typically suited for first-time homebuyers, to larger homes in premium locations with additional amenities and higher

average selling prices that generally attract a first or second move-up homebuyer.

We also offer a variety of single-story

floorplans that typically appeal to an active adult homebuyer age 55 and over.

For more than a decade, first-time and first

move-up homebuyers have accounted for an average of over 75% of our annual deliveries.

The following charts present our

overall buyer profile and the percentage of homes delivered to first-time homebuyers within each homebuilding reporting

segment for the year ended November 30, 2024 :

Operational Structure.

We operate our homebuilding business through divisions with experienced management teams who have in-depth local knowledge of their particular served markets, which helps us acquire land in preferred locations;

develop communities with products that meet local demand;

We operate our homebuilding business through divisions with experienced management teams who

have in-depth local knowledge of their particular served markets, which helps us acquire land in preferred locations;

communities with products that meet local demand;

and understand local regulatory environments.

Our division management teams exercise considerable autonomy in identifying land acquisition opportunities;

Our division management

teams exercise considerable autonomy in identifying land acquisition opportunities;

developing land and communities;

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and controlling costs.

To help maintain consistent execution within the organization, our division management teams and other employees are continuously trained on KB Edge principles and are evaluated, in part, based on their achievement of relevant operational objectives.

Our corporate management and support personnel develop and oversee the implementation of company-wide strategic initiatives, our overall operational policies and internal control standards, and perform various centralized functions, including architecture;

To help maintain consistent execution within the

organization, our division management teams and other employees are continuously trained on KB Edge principles and are

evaluated, in part, based on their achievement of relevant operational objectives.

Our corporate management and support personnel develop and oversee the implementation of company-wide strategic

initiatives, our overall operational policies and internal control standards, and perform various centralized functions, including

architecture;

purchasing and national contracts;

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land acquisition approval;

risk and litigation management;

risk and litigation

accounting and financial reporting;

internal audit and compliance activities;

information technology (“IT”) systems;

information technology (“IT”)

human resources strategy;

and investor and media relations.

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Developable land for the production of homes is a core resource for our business.

Based on our current strategic plans, we seek to own or control land sufficient to meet our forecasted production goals for the next three to five years.

In 2024, we intend to continue to invest in and develop land positions within attractive submarkets and selectively acquire or control additional land that meets our investment return standards.

We may periodically sell certain land interests or monetize land previously held for future development to strategically balance our land portfolio in line with local or national market environments or for other reasons.

We may also decide not to exercise certain land option contracts and other similar contracts due to market conditions and/or changes in our marketing strategy.

Based on our current strategic plans, we

seek to own or control land sufficient to meet our forecasted production goals for the next three to five years.

intend to continue to invest in and develop land positions within attractive submarkets and selectively acquire or control

additional land that meets our investment return standards.

We may periodically sell certain land interests or monetize land

previously held for future development to strategically balance our land portfolio in line with local or national market

environments or for other reasons.

We may also decide not to exercise certain land option contracts and other similar contracts

due to market conditions and/or changes in our marketing strategy.

Our community development process generally consists of four phases:

land acquisition, land development into finished lots for a community (if necessary), home construction and delivery of completed homes to homebuyers.

Historically, our community development process has typically ranged from 12 to 24 months in our West Coast homebuilding reporting segment, with a somewhat shorter duration in our other homebuilding reporting segments.

The development process in our West Coast homebuilding reporting segment is typically longer than in our other segments due to the municipal and regulatory requirements that are generally more stringent in California.

land acquisition, land development into finished

lots for a community (if necessary), home construction and delivery of completed homes to homebuyers.

Historically, our

community development process has typically ranged from 10 to 24 months in our West Coast homebuilding reporting

segment, with a somewhat shorter duration in our other homebuilding reporting segments.

The development process in our

West Coast homebuilding reporting segment is typically longer than in our other segments due to the municipal and regulatory

requirements that are generally more stringent in California.

Our community development process varies based on, among

other things, the extent and speed of required government approvals and utility service activations, the overall size of a particular community, the scope of necessary site preparation activities, the type of product(s) that will be offered, weather conditions, time of year, promotional marketing results, the availability of construction resources, consumer demand, local and general economic and housing market conditions, and other factors.

For example, in 2022 and 2023, we modified our land development strategy, electing where appropriate to build in smaller phases, and in some cases, to defer the start of the next phase of lots in a community to align with expected demand.

In calibrating our investments to evolving market conditions, we increased our investments in land acquisition and land development in the 2023 second half, as compared to the 2023 first half.

We believe the conditions we experienced in 2023 will generally persist next year, as discussed below under “Outlook.”

Although they vary significantly in size and complexity, our single-family residential home communities typically consist of 50 to 150 lots per product line, with lots ranging in size from 1,800 to 11,000 square feet.

In our communities, we typically offer four to 15 home design choices.

We also generally build one to three model homes at each community so that prospective homebuyers can preview the various products available.

Depending on the community, we may offer premium lots containing more square footage, better views and/or location benefits.

Some of our communities consist of multiple-story structures that encompass several attached condominium-style units.

other things, the extent and speed of required government approvals and utility service activations, the overall size of a

particular community, the scope of necessary site preparation activities, the type of product(s) that will be offered, weather

conditions, time of year, promotional marketing results, the availability of construction resources, consumer demand, local and

general economic and housing market conditions, and other factors.

Although they vary significantly in size and complexity, our single-family residential home communities typically consist

of 50 to 150 lots per product line , with lots ranging in size from 2,000 to 11,000 square feet .

In our communities, we typically

offer four to 15 home design choices .

We generally build one to three model homes at each community so that prospective

homebuyers can preview the various products available.

Depending on the community, we may offer premium lots containing

more square footage, better views and/or location benefits.

Some of our communities consist of multiple-story structures that

encompass several attached condominium-style units.

Land Acquisition and Land Development.

We continuously evaluate land acquisition opportunities against our investment return standards, while balancing competing needs for financial strength, liquidity and land inventory for future growth.

When we acquire land, we generally focus on parcels with lots that are entitled for residential construction and are either physically developed to start home construction (referred to as “finished lots”) or partially finished.

However, depending on market conditions and available opportunities, we may acquire undeveloped and/or unentitled land.

We may also invest in land that requires us to repurpose and re-entitle the property for residential use, such as urban in-fill developments.

We expect that the overall balance of undeveloped, unentitled, entitled, partially finished and finished lots in our inventory will vary over time, and in implementing our strategic growth initiatives, we may acquire a greater proportion of undeveloped or unentitled land in the future if and as the availability of reasonably priced land with finished or partially finished lots diminishes.

As part of the decision-making process for approving a land purchase, we review extensive information about a proposed project, including past use;

assessment of environmentally sensitive areas and areas that may be suitable for parks, trails, and open space preservation areas;

assessment of site development required, including any work needed to comply with storm water regulations;

We continuously evaluate land acquisition opportunities against our investment

return standards, while balancing competing needs for financial strength, liquidity and land inventory for future growth.

we acquire land, we generally focus on parcels with lots that are entitled for residential construction and are either physically

developed to start home construction (referred to as “finished lots”) or partially finished.

However, depending on market

conditions and available opportunities, we may acquire undeveloped and/or unentitled land.

We may also invest in land that

requires us to repurpose and re-entitle the property for residential use, such as urban in-fill developments.

We expect that the

overall balance of undeveloped, unentitled, entitled, partially finished and finished lots in our inventory will vary over time, and

in implementing our strategic growth initiatives, we may acquire a greater proportion of undeveloped or unentitled land in the

future if and as the availability of reasonably priced land with finished or partially finished lots diminishes.

As part of the decision-making process for approving a land purchase, we review extensive information about a proposed

project, including past use;

assessment of environmentally sensitive areas and areas that may be suitable for parks, trails, and

open space preservation;

assessment of site development required, including any work needed to comply with storm water

proximity to major employment and retail centers;

and site design and product (home designs and specifications) plans that are, among other things, consistent with our focus on building highly energy- and water-efficient homes, as discussed below under “Environmental, Social and Governance.”

We generally seek to structure our land acquisition and land development activities to minimize, or defer the timing of, expenditures in order to reduce both the market risks associated with holding land and our working capital and financial commitments, including interest and other carrying costs.

We typically use contracts that, in exchange for a small initial option payment or earnest money deposit, give us an option or similar right to acquire land at a future date, usually at a pre-determined price and pending our satisfaction with the feasibility of developing and selling homes on the land and/or an underlying land seller’s completion of certain obligations, such as securing entitlements, developing infrastructure or finishing lots.

We refer to land subject to such option or similar contractual rights as being “controlled.” Our decision to exercise a particular land option or similar right is based on the results of our due diligence and continued market viability analysis after entering into such a contract.

The following table presents the number of inventory lots we owned, in various stages of development, or controlled under land option contracts or other similar contracts by homebuilding reporting segment as of November 30, 2023 and 2022:

Homes Under Construction Land Under Development Land Under Option (a) Total Land

and site design and product (home designs and specifications)

plans that are, among other things, consistent with our focus on building highly energy- and water-efficient homes.

We generally seek to structure our land acquisition and land development activities to minimize, or defer the timing of,

expenditures in order to reduce both the market risks associated with holding land and our working capital and financial

commitments, including interest and other carrying costs.

This may entail developing land in smaller phases wherever possible,

and balancing development with our starts pace to manage our inventory of finished lots.

We typically use contracts that, in

exchange for a small initial option payment or earnest money deposit, give us an option or similar right to acquire land at a

future date, usually at a pre-determined price and pending our satisfaction with the feasibility of developing and selling homes

on the land and/or an underlying land seller’s completion of certain obligations, such as securing entitlements, developing

infrastructure or finishing lots.

We refer to land subject to such option or similar contractual rights as being “controlled.” Our

decision to exercise a particular land option or similar right is based on the results of our due diligence and continued market

viability analysis after entering into such a contract.

The following table presents the number of inventory lots we owned, in various stages of development, or controlled under

land option contracts or other similar contracts by homebuilding reporting segment as of November 30, 2024 and 2023 :

Homes Under Construction

Land Under Development

Land Under Option (a)

Owned or Under Option

2023 2022 2023 2022 2023 2022 2023 2022

West Coast 2,343 1,882 9,784 11,787 6,093 5,633 18,220 19,302

Southwest 1,567 1,937 4,365 5,975 1,085 929 7,017 8,841

Central 2,156 3,659 10,981 12,256 4,191 8,086 17,328 24,001

Southeast 1,569 1,929 8,035 8,630 3,807 6,092 13,411 16,651

7,635 9,407 33,165 38,648 15,176 20,740 55,976 68,795

(a) Land under option as of November 30, 2023 and 2022 includes 6,260 and 5,543 lots, respectively, under land option contracts or other similar contracts where the associated deposits were refundable at our discretion.

The following charts present the percentage of inventory lots we owned or controlled under land option contracts or other similar contracts by homebuilding reporting segment and the percentage of total lots we owned and had under option as of November 30, 2023:

(a) Land under option as of November 30, 2024 and 2023 includes 18,923 and 6,260 lots, respectively, under land option

contracts or other similar contracts where the associated deposits were refundable at our discretion.

The following charts present the percentage of inventory lots we owned or controlled under land option contracts or other

similar contracts by homebuilding reporting segment and the percentage of total lots we owned and had under option as of

November 30, 2024 :

Home Construction and Deliveries.

Following the acquisition of land and, if necessary, the development of the land into finished lots, we typically begin constructing model homes and marketing homes for sale.

As discussed above under “Business Strategy,” we generally commence construction of a home after we have a signed purchase contract with a homebuyer and have obtained preliminary credit approval or other evidence of the homebuyer’s financial ability to purchase the home.

Other than model homes, our inventories typically do not consist of a significant number of completed unsold homes.

However, cancellations of home sales contracts prior to the delivery of the underlying homes, the construction of attached products with some unsold units, or specific marketing or other strategic considerations will result in our having some unsold completed or partially completed homes in our inventory.

Although our typical cycle time from home sale to delivery has historically ranged from six to seven months, supply chain disruptions and other production-related issues contributed to our build times and overall cycle times remaining extended in 2023 and 2022.

We achieved meaningful improvement in our build times beginning in the 2023 second quarter, driven by a stabilizing supply chain and improved construction services availability, and remain committed to further reducing our build times in 2024 and moving closer to our historical levels of between four to five months.

We, or outside general contractors we may engage, contract with a variety of independent contractors, who are typically locally based, to perform all land development and home construction work through these independent contractors’ own employees or subcontractors.

Following the acquisition of land and, if necessary, the development of the land into

finished lots, we typically begin constructing model homes and marketing homes for sale.

As discussed above under “ Business

Strategy ,” we generally commence construction of a home after we have a signed sales contract with a homebuyer and have

obtained preliminary credit approval or other evidence of the homebuyer’s financial ability to purchase the home.

model homes, our inventories typically do not consist of a significant number of completed unsold homes.

cancellations of home sales contracts prior to the delivery of the underlying homes, the construction of attached products with

some unsold units, or specific marketing or other strategic considerations will result in our having some unsold completed or

partially completed homes in our inventory.

Our typical cycle time from home sale to delivery has historically ranged from six

to seven months.

We, or outside general contractors we may engage, contract with a variety of independent contractors, who are typically

locally based, to perform all land development and home construction work through these independent contractors’ own

employees or subcontractors.

We do not self-perform any land development or home construction work.

These independent contractors also supply some of the building materials required for such production activities.

Our contracts with these independent contractors require that they comply with all laws applicable to their work, including wage and safety laws, meet performance standards, follow local building codes and permits, and abide by our Ethics Policy referenced under Item 10 – Directors, Executive Officers and Corporate Governance in this report.

These independent

contractors also supply some of the building materials required for such production activities.

Our contracts with these

independent contractors require that they comply with all laws applicable to their work, including wage and safety laws, meet

performance standards, follow local building codes and permits, and abide by our Ethics Policy referenced under Item 10 –

Directors, Executive Officers and Corporate Governance in this report.

Raw Materials .

Outside of land, the principal raw materials used in our production process are concrete and forest products.

Outside of land, the principal raw materials used in our production process are concrete and forest

Other primary materials used in home construction include drywall, and plumbing and electrical items.

We source all of our building materials from third parties and, to the extent feasible, select products with sustainability certifications or attributes.

In addition, our lumber suppliers generally certify that their wood was not sourced from endangered forests or is certified by recognized programs.

We attempt to enhance the efficiency of our operations by using, where practical, standardized materials that are commercially available on competitive terms from a variety of outside sources.

In addition, we have national and regional purchasing programs for certain building materials, appliances, fixtures and other items that allow us to benefit from large-quantity purchase discounts and, where available, participate in outside manufacturer or supplier rebate programs.

When possible, we arrange for bulk purchases of these products at favorable prices from such manufacturers and suppliers.

Our “backlog” consists of homes that are under a purchase contract but have not yet been delivered to a homebuyer.

Ending backlog represents the number of homes in backlog from the previous period plus the number of net orders (new orders for homes less home sales contract cancellations) generated during the current period minus the number of homes delivered during the current period.

our building materials, many of which are domestically produced, from third parties and , to the extent feasible, select products

with sustainability certifications or attributes.

In addition, our lumber suppliers generally certify that their wood was not

sourced from endangered forests or is certified by recognized programs.

We attempt to enhance the efficiency of our operations

by using, where practical, standardized materials that are commercially available on competitive terms from a variety of outside

In addition, we have national and regional purchasing programs for certain building materials, appliances, fixtures and

other items that allow us to benefit from large-quantity purchase discounts and, where available, participate in outside

manufacturer or supplier rebate programs.

When possible, we arrange for bulk purchases of these products at favorable prices

from such manufacturers and suppliers.

Our “backlog” consists of homes that are under a sales contract but have not yet been delivered to a homebuyer.

backlog represents the number of homes in backlog from the previous period plus the number of net orders (new orders for

homes less home sales contract cancellations) generated during the current period minus the number of homes delivered during

the current period.

Our backlog at any given time will be affected by cancellations, homes delivered and our community count.

Backlog value represents potential future housing revenues from homes in backlog.

Our cancellation rates and the factors affecting such rates are further discussed below under both Item 1A – Risk Factors and Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

The following charts present our ending backlog (number of homes and value) by homebuilding reporting segment as of November 30, 2022 and 2023:

Our cancellation rates and the factors

affecting such rates are further discussed below under both Item 1A – Risk Factors and Item 7 – Management’s Discussion and

Analysis of Financial Condition and Results of Operations in this report.

The following charts present our ending backlog ( number of homes and value ) by homebuilding reporting segment as of

November 30, 2023 and 2024 :

Competition, Seasonality, Delivery Mix and Other Factors

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contracting for construction services, such as carpentry, roofing, electrical and plumbing;

and acquiring attractive developable land, though the intensity of competition can vary and fluctuate between and within individual markets and submarkets.

We compete for homebuyers, construction resources and desirable land against numerous homebuilders, ranging from regional and national firms, some of which are larger and have greater financial resources than us, to small local enterprises.

As to homebuyers, we primarily compete with other homebuilders on the basis of selling price, community location and amenities, availability of financing options, home designs, reputation, home construction cycle time, and the design options and upgrades that can be included in a home.

In some cases, this competition occurs within larger residential development projects containing separate sections other homebuilders design, plan and develop.

We also compete for homebuyers against housing alternatives to new homes, including resale homes, apartments, single-family rentals and other rental housing.

In markets experiencing extensive construction activity, including areas recovering from earthquakes, wildfires, hurricanes, flooding or other natural disasters, there can be craft and skilled trade shortages that limit independent contractors’ ability to supply construction services, which in turn tends to drive up our costs and/or extend our production schedules.

Elevated construction activity, and reallocations of staff for public safety priorities after natural disasters or otherwise can increase the time needed to obtain governmental approvals or utility service activations and, combined with tariffs imposed or increased by the U.S.

and other governments, the cost of certain raw building materials, such as steel, lumber, drywall and concrete, or finished products.

We expect these upward cost trends to continue in 2024, particularly if and as there is greater competition for these resources across a disrupted global supply chain.

and acquiring attractive developable

land, though the intensity of competition can vary and fluctuate between and within individual markets and submarkets.

compete for homebuyers, construction resources and desirable land against numerous homebuilders, ranging from regional and

national firms, some of which are larger and have greater financial resources than us, to small local enterprises.

homebuyers, we primarily compete with other homebuilders on the basis of selling price, community location and amenities,

availability of financing options, home designs, reputation, build time, and the design choices and options that can be included

In some cases, this competition occurs within larger residential development projects containing separate sections

other homebuilders design, plan and develop.

We also compete for homebuyers against housing alternatives to new homes,

including resale homes, apartments, single-family rentals and other rental housing.

In markets experiencing extensive construction activity, including areas recovering from earthquakes, wildfires (which is

expected to be the case in the Los Angeles County area due to the unprecedented wildfires it experienced in January 2025) ,

hurricanes (such as the hurricanes that made landfall in the Southeast United States in September and October 2024), flooding

or other natural disasters, there can be craft and skilled trade shortages that limit independent contractors’ ability to supply

construction services, which in turn tends to drive up our costs and/or extend our production schedules.

Elevated construction

activity, and reallocations of staff for public safety priorities after natural disasters or otherwise, can increase the time needed to

obtain governmental approvals or utility service activations and, combined with tariffs imposed or increased by the U.S.

other governments, the cost of certain raw building materials, such as steel, lumber, drywall and concrete, or finished products.

We expect these upward cost trends may continue in 2025 , particularly if and as there is greater competition for these resources

across a disrupted global supply chain.

Our performance is affected by seasonal demand trends for housing.

Traditionally, there has been more consumer demand for home purchases and we tend to generate more net orders in the spring and early summer months (corresponding to most of our second quarter and part of our third quarter) than at other times of the year.

This “selling season” demand results in our typically delivering more homes and generating higher revenues from late summer through the fall months (corresponding to part of our third quarter and all of our fourth quarter).

However, as illustrated in the table below, the combination of rapidly rising mortgage interest rates, elevated inflation and other macroeconomic and geopolitical concerns disrupted our usual seasonal patterns in 2022, with our 2022 second half net orders negatively impacted by many prospective buyers electing to pause on their homebuying decision and a 2022 fourth quarter slowdown that was more pronounced than

Demand began to improve in the 2023 second quarter due to, among other things, constrained resale home inventory, favorable demographic trends, buyer interest in homes at our price points and our selective implementation of targeted sales strategies, including pricing adjustments and other homebuyer concessions (particularly, mortgage-related concessions such as interest rate buydown or lock programs) to help drive order activity and minimize cancellations.

We can provide no assurance whether or to what extent typical seasonal performance trends will occur in 2024, or at all.

First Quarter Second Quarter Third Quarter Fourth Quarter

2023 19 % 36 % 28 % 17 %

2022 39 % 36 % 19 % 6 %

2021 26 % 27 % 25 % 22 %

Traditionally, there has been more

consumer demand for home purchases and we tend to generate more net orders in the spring and early summer months

(corresponding to most of our second quarter and part of our third quarter) than at other times of the year.

This “selling season”

demand results in our typically delivering more homes and generating higher revenues from late summer through the fall

months (corresponding to part of our third quarter and all of our fourth quarter).

However, as illustrated in the table below, the

combination of rapidly rising mortgage interest rates, elevated inflation and other macroeconomic and geopolitical concerns

disrupted our usual seasonal patterns in 2022.

Demand began to improve in the 2023 second quarter due to, among other

things, constrained resale home inventory, favorable demographic trends, buyer interest in homes at our price points and our

selective implementation of targeted sales strategies, including pricing adjustments and other homebuyer concessions

(particularly, mortgage-related concessions such as interest rate buydown or lock programs) to help drive order activity and

minimize cancellations.

We can provide no assurance whether or to what extent typical seasonal performance trends will occur

in 2025, or at all.

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Homes Delivered

2023 21 % 28 % 25 % 26 %

2022 21 % 25 % 26 % 28 %

2021 21 % 26 % 26 % 27 %

Housing Revenues

2023 22 % 27 % 25 % 26 %

2022 20 % 25 % 27 % 28 %

2021 20 % 25 % 26 % 29 %

Delivery Mix and Other Factors.

In addition to the overall volume of homes we sell and deliver, our results in a given period are significantly affected by the geographic mix of markets and submarkets in which we operate;

the number and characteristics of the communities we have open for sales in those markets and submarkets;

and the products we sell from those communities during the period.

While there are some similarities, there are differences within and between our served markets in terms of the number, size and nature of the communities we operate and the products we offer to consumers.

These differences reflect, among other things, local homebuyer preferences;

In addition to the overall volume of homes we sell and deliver, our results in a given

period are significantly affected by the geographic mix of markets and submarkets in which we operate;

the number and

characteristics of the communities we have open for sales in those markets and submarkets;

and the products we sell from those

communities during the period.

While there are some similarities, there are differences within and between our served markets

in terms of the number, size and nature of the communities we operate and the products we offer to consumers.

differences reflect, among other things, local homebuyer preferences;

household demographics ( e.g.

, large families or working professionals;

, large families or working

professionals;

income levels);

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and the shifts that can occur in these factors over time.

These factors in each of our served markets will affect the costs we incur and the time it takes to locate, acquire rights to and develop land, open communities for sales, and market and build homes;

These factors in each of

our served markets will affect the costs we incur and the time it takes to locate, acquire rights to and develop land, open

communities for sales, and market and build homes;

the size of our homes;

our selling prices (including the contribution from homebuyers’ purchases of design options and upgrades);

our selling prices (including the contribution from

homebuyers’ purchases of design choices and options);

the pace at which we sell and deliver homes;

the rate at which communities are sold out;

the rate at which

communities are sold out;

and our housing gross profits and housing gross profit margins.

Therefore, our results in any given period will fluctuate compared to other periods based on the proportion of homes delivered from areas with higher or lower selling prices and on the corresponding land and overhead costs incurred to generate those deliveries, as well as from our overall community count.

Therefore, our results in any given

period will fluctuate compared to other periods based on the proportion of homes delivered from areas with higher or lower

selling prices and on the corresponding land and overhead costs incurred to generate those deliveries, as well as from our

overall community count.

Human Capital Resources

At November 30, 2024 and 2023 , we had approximately 2,384 and 2,205 full-time employees, respectively.

None of our employees are represented by a collective bargaining agreement.

For fiscal 2023, our turnover rate was 27%, made up of 16% voluntary turnover and 11% involuntary turnover.

For fiscal 2022, our turnover rate was 21%, made up of 19% voluntary turnover and 2% involuntary turnover.

employees are represented by a collective bargaining agreement.

We seek to a ttract, promote, and retain qualified personnel, particularly the leaders of our local divisions who

manage our businesses in markets and partner with various stakeholders.

We strive to create an engaging environment that

offers fulfilling work, meaningful career growth and development opportunities, and rewarding short- and long-term

compensation programs aligned with our business objectives.

We also provide employee home purchase and product and

service referral programs, as well as awards for employment service milestones.

Additionally, our benefit programs include

medical, dental, and vision insurance, a savings/retirement plan, life and disability insurance, and tuition reimbursement, along

with a range of voluntary benefits designed to meet individual needs.

We engage nationally recognized external compensation

and benefits consulting firms to objectively evaluate our programs and benchmark them against those of peers and similarly

sized organizations.

Through our 2024 fiscal year end, our top division and regional leaders have an average tenure with us of

nearly 13 years , and the local leaders responsible for land acquisition, entitlement, and development average over eight years.

Our senior corporate officers, who set our overall strategy, have an average tenure of 22 years .

The ex tensive service history of

our leadership team has provided consistency in managing our business and in reinforcing and sustaining our company culture

at all levels of the organization.

For fiscal year 2024 , our turnover rate was 18% , made up of 15% voluntary turnover and 3%

involuntary turnover.

For fiscal year 2023 , our turnover rate was 27%, made up of 16% voluntary turnover and 11%

involuntary turnover.

We believe these rates are reasonable for our industry and market conditions at the time.

In order to achieve our strategic goals, it is essential for us to attract, promote and retain qualified personnel, particularly the local division leaders who manage our businesses in our served markets and partner with all constituents.

Therefore, we strive to create an engaging environment that offers our employees satisfying work, with meaningful opportunities for career growth and development, rewarding short- and long-term compensation programs that are aligned with achieving our business goals, employee home purchase and referral programs, and employment milestone service awards.

In addition, we offer our employees benefit programs, which include medical, dental and vision insurance, a savings/retirement plan, life and disability insurance, and tuition reimbursement, along with an array of voluntary benefits designed to meet individual needs.

We engage nationally recognized outside compensation and benefits consulting firms to objectively evaluate our programs and benchmark them against peers and other similarly sized organizations.

Our top division and regional leaders average nearly 12 years of tenure with us, and the local leaders responsible for land acquisition, entitlement, and development average over nine years with us.

In addition, our named executive officers who are responsible for setting our overall strategy have an average tenure of 21 years.

Our leadership team’s long service history provides consistency in managing our business and helps reinforce and sustain our company culture through all levels of the organization.

Promoting High Ethical Standards.

We are committed to achieving our business goals with integrity and high ethical standards that apply to our directors, officers and employees.

All employees are required to complete training on our Ethics Policy, which includes their affirming compliance with the guidelines contained therein.

In addition, we maintain an ethics committee that is focused on compliance and ethics matters for our business.

We also have an independently operated hotline and reporting website through which our employees and third parties can anonymously report ethics-related concerns.

Talent Acquisition and Workforce Development.

In addition to our strong talent and career development programs that drive a high rate of internal promotions within KB Home, we are constantly working to attract the best possible candidates to add to our employee team.

Through our efforts to engage top talent, we have proactively increased the diversity of our workforce while adding specialized skills and experiences to our team.

In addition to recruiting experienced homebuilding industry candidates, we have invested in several programs with the objectives of deepening our bench of talent to bring new ways of thinking into the mix and expanding the ethnic and gender diversity of our team.

In recent years, we have invested in both our college/university and military veteran recruiting programs.

We are also a founding supporter of the Building Talent Foundation, which was established by the Leading Builders of America to address the severe and persistent labor shortage across skilled trades by creating a sustainable workforce in residential construction.

To promote an inclusive workforce and the professional growth of the diverse individuals who join us, our employment policies prohibit discrimination based on race, color, religion, national origin, ancestry, familial status, age, veteran status, physical disability, mental disability, medical condition, gender, gender identity, sexual orientation, marital status, or any other legally protected status .

We are committed to supporting a work culture that treats all employees fairly and with respect, promotes inclusivity, provides equal opportunities for the professional growth of the diverse individuals who join us, and advancement based on merit.

At November 30, 2023, females made up approximately 42% of our workforce and 33% of our managerial employees, with ethnic and racial minorities making up approximately 37% of our workforce and 22% of our managerial employees.

In addition, 45% of our board of directors are women or ethnic minorities.

We intend to continue using a combination of targeted recruiting, talent development and internal promotion strategies to expand the diversity of our employee base across all roles and functions.

Learning and Development.

To help advance our employees’ personal growth and drive consistent execution of our business strategy, including our customer obsession philosophy, we provide training opportunities that align with team members’ responsibilities over the arc of their careers with us.

We support a dedicated internet-based learning platform, KBU, with a broad portfolio of written, audio-visual and interactive enterprise-wide and discipline-specific policy and training materials that provides all employees with access to training, development and other resources to help them elevate their performance and careers.

We believe training through KBU not only supports employee job performance and development but also sustains and enhances our inclusive culture and strengthens our brand.

We believe these programs, which include environmental sustainability programs, ethics training and more, help our team work better together.

This platform includes a library of approximately 412 self-directed courses and virtual, instructor-led programs for employees at all levels of our organization and 50 leadership and managerial training topics.

New employee orientations, functional role training, and our required annual ethics training and certification, are provided on this platform.

In 2023, 69 managers at various levels across our divisions and departments attended KB Home’s 6-session Managing Essentials training series in our live, virtual classroom, bringing the total number of managers who have completed this comprehensive program to more than 413 over the past ten years.

During 2023, our team members completed more than 28,169 courses in total, an average of approximately 13 courses per employee.

Managers and supervisors are provided training to help their direct reports progress in their professional development.

To recognize and promote outstanding employees, we conduct a comprehensive talent and succession planning review process on an annual basis, focused on identifying top-performing, high-potential, and diverse team members for advancement to key field and corporate leadership roles.

This review process is overseen by the management development and compensation committee of our board of directors, the members of which have significant experience and insight into human capital management, talent development and executive compensation across a variety of organizational structures, as well as strong backgrounds in executive leadership.

We aim to reach our business objectives by operating with integrity and following

high ethical standards.

All employees must complete a training course on our Ethics Policy where they confirm they will

adhere to its guidelines.

An internal ethics committee composed of senior corporate and regional leaders oversees the Ethics

Policy and reviews related matters.

We provide an independently managed hotline and reporting website that allow employees

and third parties to anonymously report any ethics-related issues.

Talent Acquisition and Development.

We place a significant emphasis on growing our team members’ skills through talent

development programs, including investing in training as discussed below.

We believe these initiatives have helped us achieve

a high level of internal promotions and retention.

At the same time, we seek to attract the best possible candidates to join our

company to, among other things, bring in innovative and diverse perspectives to help advance our business goals.

In addition to targeting experienced professionals within the homebuilding industry, we have implemented several

programs designed to deepen our talent pool.

These programs include partnerships with colleges and universities, which help

us to identify and recruit promising interns and early career professionals.

We have also made a concerted effort to recruit

military veterans, recognizing the unique qualities they bring to the workplace, and are a founding supporter of the Building

Talent Foundation, established by the Leading Builders of America to help address the severe and persistent labor shortage in

skilled trades affecting the homebuilding industry.

Training and Career Development.

To promote our employees ’ professional growth and help drive the consistent

execution of our business strategy, including our customer obsession philosophy, we offer training opportunities tailored to

team members ’ responsibilities throughout their careers with us.

We support a dedicated internet-based learning platform,

KBU, which includes a broad range of written, audio-visual, and interactive enterprise-wide and discipline-specific policy and

training materials.

The platform features a library of approximately 1,811 self-directed courses and virtual, instructor-led

programs for employees at all levels, as well as 389 leadership and managerial training topics .

During 2024, our team members

completed more than 30,230 courses in total, averaging approximately 11 courses per employee.

Managers and supervisors

also receive training to support the professional development of their direct reports.

To recognize and promote talented employees, we carry out a workforce and succession planning review process every

This process is aimed at identifying top-performing, high-potential team members, with a diverse range of experiences

and backgrounds, for advancement to crucial field and corporate leadership positions.

The management development and

compensation committee of our board of directors, composed of members with broad expertise and insight into human capital

management, talent development and executive compensation across various organizational structures, as well as solid

backgrounds in executive leadership, oversees this review process.

To promote an inclusive workforce and the professional growth of the diverse individuals who join us, our

employment policies prohibit discrimination based on race, color, religion, national origin, ancestry, familial status, age, veteran

status, physical disability, mental disability, medical condition, gender, gender identity, sexual orientation, marital status, or any

other legally protected status.

As outlined in our published Human Rights Statement, w e are committed to fostering a work

culture that treats all employees fairly and with respect.

This includes providing equal opportunities for professional growth

and advancement based solely on merit, ensuring that every individual has the chance to thrive and succeed based on their own

abilities and contributions .

As of November 30, 2024 , females comprised 42% of our workforce and 33% of managerial

In addition, ethnic/racial minorities comprised 38% of our workforce and 23% of managerial employees.

Employee Safety and Wellness.

We strive to provide a safe working environment for our employees, as well as our trade partners, as discussed below under “Social Practices.” In addition to the benefits programs described above, we offer a wellness program designed to support our team members’ general health.

Our wellness program offerings are available online

so that every employee has access to them.

Monthly interactive webinars address topics such as holistic health, including nutrition, and preventive care.

We have continued to enhance our wellness program throughout 2023 with wellness challenges and monthly wellness webinars, and see it as a positive way to create and strengthen internal connections with and among our employees.

As an outcome of the disruption of the COVID-19 pandemic, we saw a hybrid approach of in-office and remote participation as the predominant way work environments are structured.

Since 2022, we have operated our business utilizing a flexible work program in our division and corporate office locations that establishes a certain number of in-office workdays and is intended to help our employees maintain a reasonable professional/personal life balance as we continue to invest in and protect our strong company culture.

Environmental, Social and Governance (“ESG”)

For more than 16 years, we have made a dedicated effort to be an industry leader in sustainability, which encompasses our ESG practices.

We believe our initiatives provide tangible benefits for our customers, our operations and the environment, and distinctly differentiate us from other builders of new homes and from resale homes.

We have established an Environmental Management System (“EMS”), through which we focus on continually improving the energy efficiency of our homes so, among things, there are less greenhouse gas (“GHG”) emissions associated with their use over their multi-decade life cycle.

Our EMS, and its related manuals and other documentation, provides a framework for planning, implementing, measuring, evaluating and refining these efforts over time.

In addition to our internal executive team who implements and operates within the EMS, we monitor evolving trends and gather input and guidance for our initiatives through our National Advisory Board, which is a panel of external advisors we established in 2009 solely for these purposes.

These advisors, who have a broad and diverse set of personal and professional perspectives, experiences and expertise, help us shape our sustainability priorities and reporting, as well as our approach to stakeholder engagement.

Environmental Practices .

We are committed to building energy-efficient homes and have progressively expanded our sustainability program and use of technological advancements to make renewable solar energy, water efficiency, waste reduction and indoor environments that support personal wellness available to our buyers.

According to the U.S.

Energy Information Administration, about 22% of total energy use in the U.S.

in 2022 was due to daily residential living.

With most of the energy consumption during a home’s multi-decade life occurring after we deliver the home to the customer, our products’ energy efficiency is a key part of our efforts to help minimize a home’s impact on the environment, including the GHG and other carbon emissions produced, from its day-to-day use.

ENERGY STAR Commitment .

ENERGY STAR is a voluntary U.S.

Environmental Protection Agency (“EPA”) and Department of Energy program that seeks to help consumers, businesses and industry save money and protect the environment through the adoption of energy-efficient products and practices.

We were the first national homebuilder to make a broad commitment to building ENERGY STAR certified homes, and have built over 188,000 high-performance ENERGY STAR certified new homes since 2000, more than any other builder in the nation.

By comparison, the EPA estimates only about 10% of all new homes in the U.S.

were ENERGY STAR certified in the past three years.

According to the EPA, ENERGY STAR certified new homes achieve a 20% energy-efficiency improvement on average compared to new homes built to local code, and even more compared to resale homes without certification.

Each certified home is estimated by the EPA to produce approximately 3,287 pounds (1.5 metric tons) per year less GHG emissions than a typical home.

Based on our energy use analysis, our homes currently save our homeowners an estimated average of $1,400 annually on utility bills compared to typical resale homes.

GHG Emission Goal .

We have a goal to reduce the estimated GHG emissions (metric tons per year) produced through the use of our average home built in 2025 by 0.5 metric tons per year, or 8%, from the estimated 6 metric tons per year average for a KB home built in 2020.

Our benchmark for measuring the achievement of this goal is the Home Energy Rating System (HERS®) Index, as each HERS Index score point reduction equates to a 1% improvement in energy efficiency relative to a standard new home and potentially creates less GHG emissions by an average of 0.1 metric tons (as calculated based on the states in which we operate).

Therefore, we expect to attain our GHG emissions goal if we lower our national average HERS Index score by five points, from 50 in 2020 to a target of 45 for 2025.

For comparison, a typical resale home today has a HERS Index score of 130.

Solar and Clean Energy .

We strive to provide a safe and supportive working environment for our employees and

trade partners, as discussed under the “ Safety and Community Investment Initiatives ” section of this report.

Ensuring the well-

being of our team members is a top priority, and we have implemented several initiatives to achieve this goal.

In addition to the

comprehensive benefits programs previously described, we offer an extensive wellness program designed to support the overall

health and well-being of our employees, including mental health and stress management.

Our wellness program is accessible to

all employees through an online platform, ensuring that everyone, regardless of location or work schedule, can benefit from the

resources provided.

The program features monthly interactive webinars that cover a range of topics related to holistic health.

These webinars are designed to educate employees on various aspects of wellness, including nutrition, mental health, physical

fitness, and preventive care.

We believe that by offering these resources, we can help our employees lead healthier, more

balanced lives, which in turn can lead to increased productivity and job satisfaction.

By continuously enhancing and expanding

our offerings, we aim to create a positive and supportive work environment that benefits both our employees and the

organization as a whole.

Sustainability Principles and Practices

For more than 17 years, we have made a dedicated effort to be an industry leader in sustainability and seek to integrate

sustainable features, products and design elements into our homes in ways that maintain their affordability to our core customer

segments and, as noted above under “ Business Strategy ,” help to lower long-term homeownership costs.

We believe our

initiatives provide tangible benefits for our customers, our operations and the environment, and distinctly differentiate us from

other builders of new homes and from resale homes.

Sustainability Practices.

We have established an Environmental Management System (“EMS”), through which we focus

on continually improving the energy efficiency of our homes so, among other things, there are less greenhouse gas (“GHG”)

emissions associated with their use over their multi-decade life cycle.

Our EMS, and its related manuals and other

documentation, provides a framework for planning, implementing, measuring, evaluating and refining these efforts over time.

In addition to our internal executive team who implements and operates within the EMS, we monitor evolving trends and gather

input and guidance for our initiatives through our National Advisory Board, which is a panel of external advisors we established

in 2009 solely for these purposes.

These advisors, who have a broad and diverse set of personal and professional perspectives,

experiences and expertise, help us shape our sustainability priorities and reporting, as well as our approach to stakeholder

Energy Efficiency Commitment .

With most of the energy consumption during a home’s life occurring after it is delivered

to the customer, our products’ energy efficiency is a key part of our efforts to help minimize a home’s impact on the

environment from its day-to-day use.

Reflecting our long-standing focus on enhancing the energy efficiency of our homes, in

2008 we became the first national homebuilder to make a broad commitment to building ENERGY STAR certified homes.

2024, we achieved the significant milestone of over 200,000 ENERGY STAR certified new homes built, more than any other

builder in the nation.

By comparison, the U.S.

Environmental Protection Agency (“ EPA”) estimates that fewer than 12% of

new homes nationwide meet ENERGY STAR certification standards.

ENERGY STAR is a voluntary EPA and Department of Energy program that seeks to help consumers, businesses and

industry save money and protect the environment through the adoption of energy-efficient products and practices.

the EPA, ENERGY STAR certified new homes achieve on average up to 20% energy-efficiency improvement compared to

new homes built to local code, and even more compared to resale homes without certification.

Each certified home is estimated

by the EPA to produce approximately 3,287 pounds (1.5 metric tons) per year less GHG emissions than a typical new home .

Based on our energy use analysis, our homes currently save our homeowners an estimated average of $1,400 annually on utility

bills compared to typical resale homes.

We built our first solar home in 2005 and introduced our first all solar community in 2011.

We have delivered more than 20,000 homes with solar-paneled power systems, producing an estimated total of 860 million kilowatt hours of electrical power.

In recent years, we have added higher efficiency solar panels that generate more power using the same roof space.

In 2020, we were the first national homebuilder to offer a complete roof-integrated solar-paneled system.

In 2023, we built over 3,000 solar homes in California, representing roughly 100% of our homes built in the state that year.

As of November 30, 2023, approximately 90% of our model homes and sales offices in California were powered by solar energy.

We are building all-electric homes in many areas across the country in response to consumer demand, and in some cases, local building code requirements.

Each all-electric home produces approximately 3,800 pounds less CO 2 per year compared to dual-fuel homes, minimizing the GHG emissions generated over the life cycle of our homes.

In 2023, approximately 38% of our total homes delivered were all-electric, incorporating heat pumps and other energy-efficient technology.

Indoor Environments .

In recent years, we have expanded our sustainability portfolio to include enhancing our homes’ indoor environment with air-sealing designs and high-performance ventilation systems and low- or zero-VOC products.

Every KB home incorporates high-performance ventilation that regularly introduces fresh outdoor air and, together with comprehensive air sealing, helps to reduce indoor air pollutants.

In addition, since mid-2021, we have included MERV-13 rated air filters, one of the highest-rated residential air filters on the market, as standard in the homes we build in all of our new communities.

These filters are designed to remove dust, pollen, mold and certain bacteria and viruses for better air quality compared to lower-rated air filters, and exceed current ENERGY STAR requirements.

KB homes also feature interior door hardware with antimicrobial protection intended to inhibit the growth of microbes, such as bacteria, mold and mildew, on product surfaces.

Consumer Awareness .

To assist customers in understanding the energy-efficiency benefits of our homes, we include a KB Home Energy Savings Comparison™, or ESC, with each home that provides an estimate of its monthly energy costs and monthly savings compared to a typical resale home.

We also engage in campaigns and other educational efforts, sometimes together with other companies, organizations and groups, to increase consumer awareness of the importance and impact of sustainability in selecting a home and the products within a home.

We intend to continue to research, evaluate and utilize new or improved products and construction and business practices consistent with our sustainability commitment, and believe our initiatives in this area can help put us in a better position, compared to resale homes and homebuilders with less-developed programs, to comply with evolving regulations directed at addressing climate change and similar environmental concerns, and to meet growing consumer demand for resource-efficient products, as discussed below under Item 1A – Risk Factors in this report.

In 2024, essentially all of our

homes built in California were solar homes.

As of November 30, 2024 , most of our model homes and sales offices in

California were powered by solar energy.

We are also building all-electric homes in many areas across the country per local

requirements and conditions.

Each all-electric home produces approximately 3,800 pounds less CO 2 per year compared to dual-

fuel homes, minimizing the GHG emissions generated over the life cycle of our homes.

GHG Emission Goal .

In 2020, we set a goal to lower the estimated GHG emissions (metric tons per year) produced

through the use of our average home built in 2025 by 0.5 metric tons per year, or 8%, from the estimated 6 metric tons per year

average for a KB home built in 2020.

We use the Home Energy Rating System (HERS®) Index to measure our progress, as

each point reduction in the HERS Index equates to a 1% improvement in energy efficiency relative to a standard new home and

potentially produces an average of 0.1 metric tons less GHG emissions (as calculated based on the states in which we operate).

Accordingly, our goal was to lower our national average HERS Index score by five points, from 50 for 2020 to 45 for 2025.

We achieved a HERS Index score of 45 in 2024, a year earlier than we targeted.

For comparison, a typical resale home today

has a HERS Index score of 130 .

Water Conservation .

As a homebuilder operating in some of the most water-challenged regions of the country, we also prioritize water conservation.

We provide water-saving features in our homes that reduce our homeowners’ bills and may help to mitigate strain on local communities’ water resources.

As water availability is an important consideration for local governments in approving new-home developments, we believe our leadership in this area has positioned us to effectively address water-related development concerns and help preserve this critical resource.

We were the first national homebuilder to join the EPA’s WaterSense® program, which is a voluntary partnership program that is both a label for water-efficient products and a resource for helping conserve water, and have made a commitment to using WaterSense labeled products in our homes.

According to the EPA, WaterSense labeled products use at least 20% percent less water compared to products that are not WaterSense labeled.

We were also the first national homebuilder to implement in 2021 the new WaterSense Labeled Homes Program, Version 2, under which homes are to be at least 30% more water efficient than a typical new home.

In July 2022, we committed to building WaterSense labeled homes in all our future Arizona, California and Nevada communities.

In 2023, we built more than 2,800 WaterSense labeled homes, compared to 1,760 in 2022, with all these homes in both years following the WaterSense Labeled Homes Program, Version 2.

To date, we have built over 21,800 WaterSense labeled and Water Smart homes, which we believe is more than any other homebuilder, and installed over 1.1 million WaterSense labeled fixtures, collectively helping to save an estimated 1.7 billion gallons of water per year based on calculations derived from WaterSense program and supplier data.

This initiative helps homeowners use less water as well as lower their utility bills in some of the most drought-affected areas of the country.

Waste Reduction .

We strive to use natural resources and building materials in the most efficient manner possible, which not only conserves precious natural resources but also reduces costs for our business.

We also seek to reduce waste on our construction jobsites and in our offices, along with mitigating or diverting potential pollution and e-waste.

By prioritizing sustainable practices and encouraging suppliers to do the same, we may be able to reduce our environmental impact.

As a homebuilder operating in some of the most water-challenged regions of the country, we also

prioritize water conservation.

We provide water-saving features in our homes that reduce our homeowners’ bills and may help

to mitigate strain on local communities’ water resources.

As water availability is an important consideration for local

governments in approving new-home developments, we believe our leadership in this area has positioned us to effectively

address water-related development concerns and help preserve this critical resource.

We were the first national homebuilder to join the EPA’s WaterSense® program, which is a voluntary partnership program

that is both a label for water-efficient products and a resource for helping conserve water, and have made a commitment to

using WaterSense labeled products in our homes.

According to the EPA, WaterSense labeled products use at least 20% less

water compared to products that are not WaterSense labeled.

In 2021, we were also the first national homebuilder to implement

the new WaterSense Labeled Homes Program, Version 2, under which homes are to be at least 30% more water efficient than a

typical new home.

In July 2022, we committed to building WaterSense labeled homes in all our future Arizona, California and

Nevada communities.

To date, we have built over 26,000 WaterSense labeled and Water Smart homes, which we believe is more than any other

homebuilder, and installed over 1.2 million WaterSense labeled fixtures, collectively helping to save an estimated 2.1 billion

gallons of water per year based on calculations derived from WaterSense program and supplier data.

This initiative helps

homeowners use less water, as well as lower their utility bills, in some of the most drought-affected areas of the country.

Indoor Environments .

Our sustainability program portfolio includes incorporating features that are aimed at enhancing our

homes’ indoor environment with air-sealing designs and high-performance ventilation systems and low- or zero-VOC products.

Our homes also feature interior door hardware with antimicrobial protection that helps reduce the spread of bacteria and germs.

Awards and Recognition .

We have been recognized with major national awards for our leading sustainability practices, including:

• 2023 ENERGY STAR Partner of the Year – Sustained Excellence Award – This was our 13th consecutive award for demonstrating leadership in building highly energy-efficient homes;

• 2023 ENERGY STAR Market Leader Awards – We set a new industry record by earning an unprecedented 29 awards, more than any other homebuilder;

• 2023 WaterSense Sustained Excellence Award – We were once again the only national homebuilder to receive this honor in 2023, which is the highest level of recognition given by the EPA WaterSense program.

This is the 13th consecutive year we have been recognized for our achievements in constructing water-efficient homes;

• Newsweek’s 2024 list of America’s Most Responsible Companies – We were once again named by Newsweek as one of America’s most responsible companies, the only homebuilder to make this distinguished list four years in a row.

We have been recognized with major national awards for our consistent leadership and

commitment, including:

• 2024 ENERGY STAR Partner of the Year – Sustained Excellence Award – This was our 14th consecutive award for

demonstrating leadership in building highly energy-efficient homes;

• 2024 ENERGY STAR Market Leader Awards – We set a new industry record by earning an unprecedented 30 awards,

more than any other homebuilder;

• 2024 WaterSense Sustained Excellence Award – We were once again the only national homebuilder to receive this

honor in 2024, which is the highest level of recognition given by the EPA WaterSense program.

This is the 14th

consecutive year we have been recognized for our achievements in constructing water-efficient homes;

• Newsweek’s 2025 list of America’s Most Responsible Companies – We were once again named by Newsweek as one

of America’s most responsible companies, the only homebuilder to make this distinguished list five years in a row.

This recognition is based on our industry-leading environmental and social practices;

• Newsweek’s 2023 list of America’s Most Trustworthy Companies – This is the second consecutive year we have received this recognition, which is based on three main public pillars:

• Newsweek’s 2024 list of America’s Most Trustworthy Companies – This is the third consecutive year we have

received this recognition, which is based on three main public pillars:

customer trust, investor trust and employee trust;

• USA Today’s 2023 List of America’s Climate Leaders – We were the highest-ranked homebuilder on the inaugural list, in consideration of, among other things, our annualized reductions in emission intensity and carbon disclosure rating;

• Fortune’s 2023 Change the World List – We were the first and only homebuilder on the list, which recognizes companies that have created a positive impact on society through activities such as sustainability that are part of their core business strategies.

We were honored for building the first residential microgrid communities of all-electric, solar- and battery-powered homes in California.

Our annual sustainability reports, which we have published on our website since 2008, contain more information about our programs, goals, and achievements.

Social Practices .

As discussed above under “Human Capital Resources,” we maintain a human capital strategy that supports a diverse and inclusive workforce with equal opportunity and programs for training and career advancement, strong benefits, incentives, and health, safety and wellness initiatives.

We have published a Human Rights Statement that outlines our commitment to maintaining a work culture that treats all employees fairly and with respect, promotes inclusivity, provides equal opportunities for the professional growth of the diverse individuals who join us, and advancement based on merit.

Safety is a priority for our employees, our homebuyers and our independent contractors.

To monitor our independent contractors’ compliance with their safety obligations, we track nearly 50 checkpoints across key aspects of jobsite safety, including safety documentation, personal protective equipment, scaffolding and ladders, fall protection, trenching and excavation, hazard assessment protocol, first aid and emergency plan, electrical safety and material safety.

In addition to our on-site construction managers conducting safety inspections weekly, each operating division has a designated representative who has successfully completed the Occupational Safety and Health Administration’s 30-hour training course which provides supervisors with a greater depth and variety of training on an expanded list of topics associated with the recognition, avoidance, abatement, and prevention of workplace hazards.

Since 2014, we have partnered with IBACOS®, a nationally recognized expert in home construction quality and performance, to conduct annual jobsite safety reviews.

Our commitment to the communities we serve is not solely about the homes we build, as we strive to also make social contributions that intersect with the nature of our business.

Our KB Cares philanthropic program has four key focus areas:

• USA Today’s 2024 List of America’s Climate Leaders – We were the highest-ranked homebuilder and ranked in the

top five percent of all companies, in consideration of, among other things, our annualized reductions in emission

intensity and carbon disclosure rating;

• Time Magazine’s 2024 America’s Best Midsize Companies – We were the only national homebuilder to receive this

distinction on this inaugural list, which evaluates employee satisfaction, revenue growth and sustainability

transparency;

• Forbes’ 2024 America’s Best Midsize Employers – We were recognized for a third time, the only national

homebuilder to receive this distinction.

We earned a place in the top 20% of all listed companies through our focus on

cultivating a supportive and inclusive workplace culture that encourages the growth and development of our

Our annual sustainability reports, which we have published on our website since 2008, contain more information about our

programs, goals, and achievements.

Safety and Community Investment Initiatives .

Safety is a priority for our employees, our homebuyers and our independent

To monitor our independent contractors’ compliance with their safety obligations, we track nearly 50 checkpoints

across key aspects of jobsite safety, including safety documentation, personal protective equipment, scaffolding and ladders, fall

protection, trenching and excavation, hazard assessment protocol, first aid and emergency plan, electrical safety and material

In addition to our on-site construction managers conducting safety inspections weekly, each operating division has a

designated representative who has successfully completed the Occupational Safety and Health Administration’s 30-hour

training course which provides supervisors with a greater depth and variety of training on an expanded list of topics associated

with the recognition, avoidance, abatement, and prevention of workplace hazards.

Since 2014, we have partnered with

IBACOS®, a nationally recognized expert in home construction quality and performance, to conduct annual jobsite safety

Our commitment to the communities we serve is not solely about the homes we build, as we strive to also make wider

community contributions that intersect with the nature of our business.

Our KB Cares philanthropic program has four key focus

shelter, community, sustainability/environment and construction skills/employment.

KB Cares helps to build strong social ties by, among other things, providing our employees a means of giving back to the areas in which we operate through efforts ranging from assisting people in challenging circumstances to educating the next generation.

We have partnered with local nonprofits and community organizations to contribute to the long-term social fabric of the areas in which we build.

For instance, we work with Sackcloth & Ashes, an organization that donates a blanket to a local homeless shelter for every blanket we purchase as a housewarming gift for our new homeowners.

In 2023, we partnered with the National Forest Foundation and their mission to plant 50 million trees to help restore public lands, and conserve America’s mature and old growth forests .

As noted above under “Human Capital Resources,” w e are also one of the founding partners of the Building Talent Foundation, whose mission is to advance the education, training and career progression of young people and people from underrepresented groups as skilled technical workers and business owners in residential construction.

We have a Supplier Code of Conduct that builds upon the principles, guidelines and standards within our Ethics Policy, including operating in accordance with applicable laws;

KB Cares helps to build strong

social ties by, among other things, providing our employees a means of giving back to the areas in which we operate through

efforts ranging from assisting people in challenging circumstances to educating the next generation.

We have partnered with

local nonprofits and community organizations to contribute to the long-term social fabric of the areas in which we build.

instance, we work with Sackcloth & Ashes, an organization that donates a blanket to a local homeless shelter for every blanket

we purchase as a housewarming gift for our new homeowners.

In 2023, we partnered with the National Forest Foundation and

their mission to plant 50 million trees to help restore public lands, and conserve America’s mature and old growth forests .

noted above under “ Human Capital Resources ,” w e are also one of the founding partners of the Building Talent Foundation,

whose mission is to advance the education, training and career progression of young people and people from underrepresented

groups as skilled technical workers and business owners in residential construction.

We have a Supplier Code of Conduct that builds upon the principles, guidelines and standards within our Ethics Policy,

including operating in accordance with applicable laws;

treating all workers fairly and with dignity and respect;

and providing a clean, safe and healthy work environment without the use of any involuntary or forced labor.

Our Supplier Code of Conduct also encourages our suppliers to operate in an efficient and environmentally responsible manner, conserve natural resources and minimize waste and the use of environmentally harmful materials.

Corporate Governance Practices .

Our board of directors maintains a robust governance framework and leading practices to oversee the management of our business and, among other things, oversees our sustainability initiatives as part of our overall

business strategy.

Our approach to corporate governance aligns with the principles of the Investor Stewardship Group, a coalition of some of the world’s largest investors and asset managers, as follows:

Stewardship Principle What We Do

and providing a

clean, safe and healthy work environment without the use of any involuntary or forced labor.

Our Supplier Code of Conduct

also encourages our suppliers to operate in an efficient and environmentally responsible manner, conserve natural resources and

minimize waste and the use of environmentally harmful materials.

Corporate Governance .

Our board of directors maintains a robust governance framework and leading practices to oversee

the management of our business and, among other things, oversees our sustainability initiatives as part of our overall business

Our approach to corporate governance aligns with the principles of the Investor Stewardship Group, a coalition of

some of the world’s largest investors and asset managers, as follows:

Stewardship Principle

• Boards are accountable to stockholders.

• Our board is unclassified and directors stand for election annually under a majority voting standard in an uncontested election.

• Stockholders should be entitled to voting rights in proportion to their economic interest.

• We have one class of outstanding voting securities that allow each holder one vote for each share held.

• Boards should be responsive to stockholders and be proactive in order to understand their perspectives.

• Our board is unclassified and directors stand for election annually

under a majority voting standard in an uncontested election.

• Stockholders should be entitled to voting

rights in proportion to their economic interest.

• We have one class of outstanding voting securities that allow each

holder one vote for each share held.

• Boards should be responsive to stockholders

and be proactive in order to understand their

perspectives.

• Stockholders may communicate with us and our board.

• We proactively engage with stockholders year-round.

In 2023, many stockholder dialogues included discussions on our ESG programs.

Two directors are liaisons to management on ESG matters.

• Our board monitors cybersecurity risks and related evolving physical, electronic and other protection strategies and initiatives.

• Boards should have a strong, independent leadership structure.

• Our board has a strong independent lead director with significant responsibilities and authority.

many stockholder dialogues included discussions on our

sustainability-focused programs.

Two directors are liaisons to

management on sustainability-related matters.

• Boards should have a strong, independent

leadership structure.

• Our board has a strong independent lead director with significant

responsibilities and authority.

• Only independent directors serve on board committees.

• Boards should adopt structures and practices that enhance their effectiveness.

• Boards should adopt structures and practices

that enhance their effectiveness.

• Directors have extensive and relevant experience and skills.

• 90% of directors are independent;

45% are women or racial or ethnic minorities.

• The average tenure of our board members is seven years, with five new directors having joined since 2021, promoting its refreshment.

• Boards should develop management incentive structures that are aligned with the long-term strategy of the company.

• We take stockholder feedback into account in our executive compensation program, as discussed in our 2024 Proxy Statement.

• Management compensation is designed to encourage the achievement of our long-term strategic goals.

• All unvested employee equity awards made since 2017 require double-trigger vesting in a change in control.

More information concerning our corporate governance can be found in our Proxy Statement for the 2024 Annual Meeting of Stockholders (“2024 Proxy Statement”).

50% are women or racial or ethnic

• The average tenure of our board members is approximately seven

years, with five of the directors on the Board having joined since

2021, promoting its refreshment.

• Boards should develop management incentive

structures that are aligned with the long-term

strategy of the company.

• We take stockholder feedback into account in our executive

compensation program, as discussed in our 2025 Proxy Statement.

• Management compensation is designed to encourage the achievement

of our long-term strategic goals.

• All unvested employee equity awards made since 2017 require

double-trigger vesting in a change in control.

More information concerning our corporate governance can be found in our Proxy Statement for the 2025 Annual Meeting

of Stockholders (“ 2025 Proxy Statement ”).

Government Regulations and Environmental Matters

Our operations are subject to myriad legal and regulatory requirements concerning land development (including governmental permits, taxes, assessments and fees), the homebuilding process, employment conditions and worksite health and safety.

These requirements often provide broad discretion to government authorities, and they could be interpreted or revised in ways that delay or prohibit project development or home sales, and/or make these activities more costly.

The costs to comply, or associated with any noncompliance, are, or can be, significant and variable from period to period.

A liability for environmental remediation and other environmental costs is accrued when we consider it probable that a liability has been incurred and the amount of loss can be reasonably estimated.

However, environmental costs and accruals were not material to our operations, cash flows or financial position in 2023, 2022 or 2021.

Under applicable environmental laws (including those aimed at protecting against climate change impacts), we may be responsible for, among other things, removing or remediating hazardous or toxic substances even where we were not aware of their presence or on land we previously owned.

In addition to incurring clean-up costs, the presence of harmful substances on or near our properties may prevent us from performing land development or selling homes.

Also, we are subject to federal, state and local rules that can require us to undertake extensive measures to prevent or minimize discharges of stormwater and other materials from our communities, and to protect wetlands and other designated areas.

As part of our due diligence process for land acquisitions, we often use third-party environmental consultants to investigate potential environmental risks, and we require disclosures, representations and warranties from land sellers regarding environmental risks.

We also take steps prior to our acquisition of the land to gain reasonable assurance as to the precise scope of any remediation work required and the costs associated with removal, site restoration and/or monitoring.

To the extent contamination or other environmental issues have occurred in the past, we will attempt to recover restoration costs from third parties, such as the generators of hazardous waste, land sellers or others in the prior chain of title and/or their insurers.

However, despite these efforts, there can be no assurance that we will avoid material liabilities relating to the existence or removal of toxic wastes, site restoration, monitoring or other environmental matters affecting properties currently or previously owned or controlled by us, and no estimate of any potential liabilities can be made.

Our operations are subject to myriad legal and regulatory requirements concerning land development (including

governmental permits, taxes, assessments and fees), the homebuilding process, employment conditions and worksite health and

These requirements often provide broad discretion to government authorities, and they could be interpreted or revised in

ways that delay or prohibit project development or home sales, and/or make these activities more costly.

The costs to comply,

or associated with any noncompliance, are, or can be, significant and variable from period to period.

A liability for

environmental remediation and other environmental costs is accrued when we consider it probable that a liability has been

incurred and the amount of loss can be reasonably estimated.

However, environmental costs and accruals were not material to

our operations, cash flows or financial position in 2024 , 2023 or 2022 .

Under applicable environmental laws (including those aimed at protecting against climate change impacts), we may be

responsible for, among other things, removing or remediating hazardous or toxic substances even where we were not aware of

their presence or on land we previously owned.

In addition to incurring clean-up costs, the presence of harmful substances on

or near our properties may prevent us from performing land development or selling homes.

Also, we are subject to federal,

state and local rules that can require us to undertake extensive measures to prevent or minimize discharges of stormwater and

other materials from our communities, and to protect wetlands and other designated areas.

As part of our due diligence process for land acquisitions, we often use third-party environmental consultants to investigate

potential environmental risks, and we require disclosures, representations and warranties from land sellers regarding

environmental risks.

We also take steps prior to our acquisition of the land to gain reasonable assurance as to the precise scope

of any remediation work required and the costs associated with removal, site restoration and/or monitoring.

To the extent

contamination or other environmental issues have occurred in the past, we will attempt to recover restoration costs from third

parties, such as the generators of hazardous waste, land sellers or others in the prior chain of title and/or their insurers.

However, despite these efforts, there can be no assurance that we will avoid material liabilities relating to the existence or

removal of toxic wastes, site restoration, monitoring or other environmental matters affecting properties currently or previously

owned or controlled by us, and no estimate of any potential liabilities can be made.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, beneficial ownership reports on Forms 3, 4 and 5 and proxy statements, as well as all amendments to those reports are available free of charge through our investor relations website at investor.kbhome.com, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).

They can also be found at the SEC website at www.sec.gov.

We will also provide these reports in electronic or paper format free of charge upon request made to our investor relations department at investorrelations@kbhome.com or at our principal executive offices.

We intend for our investor relations website to be the primary location where investors and the general public can obtain announcements regarding, and can learn more about, our financial and operational performance, business plans and prospects, our board of directors, our senior executive management team, and our corporate governance policies, including our articles of incorporation, By-Laws, corporate governance principles, board committee charters, and ethics policy.

We may from time to time choose to disclose or post important information about our business on or through our investor relations website, and/or through other electronic channels, including social media outlets, such as Facebook® (Facebook.com/KBHome) and X® (Twitter.com/KBHome), and other evolving communication technologies.

The content available on or through our primary website at www.kbhome.com, our investor relations website, including our sustainability reports, Human Rights Statement, Supplier Code of Conduct and other ESG-related policies, or social media outlets and other evolving communication technologies is not incorporated by reference in this report or in any other filing we make with the SEC, and our references to such content are intended to be inactive textual or oral references only.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, beneficial ownership

reports on Forms 3, 4 and 5 and proxy statements, as well as all amendments to those reports are available free of charge

through our investor relations website at investor.kbhome.com, as soon as reasonably practicable after such reports are

electronically filed with, or furnished to, the Securities and Exchange Commission (“ SEC ”).

They can also be found at the SEC

website at www.sec.gov.

We will also provide these reports in electronic or paper format free of charge upon request made to

our investor relations department at investorrelations@kbhome.com or at our principal executive offices.

We intend for our

investor relations website to be the primary location where investors and the general public can obtain announcements

regarding, and can learn more about, our financial and operational performance, business plans and prospects, our board of

directors, our senior executive management team, and our corporate governance policies, including our articles of

incorporation, By-Laws, corporate governance principles, board committee charters, and ethics policy.

We may from time to

time choose to disclose or post important information about our business on or through our investor relations website, and/or

through other electronic channels, including social media outlets, such as Facebook® (Facebook.com/KBHome) and X®

(Twitter.com/KBHome), and other evolving communication technologies.

The content available on or through our primary

website at www.kbhome.com, our investor relations website, including our sustainability reports, Human Rights Statement,

Supplier Code of Conduct and other governance policies, or social media outlets and other evolving communication

technologies is not incorporated by reference in this report or in any other filing we make with the SEC , and our references to

such content are intended to be inactive textual or oral references only.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business