Item 1. Business
Item 1. BUSINESS
General
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
meanings: “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, and book value per share as of November 30 :
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Markets
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
Idaho
Boise
Washington
Bremerton, 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, Fayetteville and Raleigh
Business Strategy
Overview . 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). 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.
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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 build a strong emotional attachment
to our products when they create a personalized home with the features and finishes they select.
• Land . 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. 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.
• Products . 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
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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 focus is on enhancing 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; increasing inventory turns to the extent practical; 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:
• 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.
• 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 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, 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 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
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 2024, we continued to be one of the highest-ranked national homebuilders for customer satisfaction in
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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
homebuyers.
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:
• 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.
• 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.
• Sustainability . Our homes are engineered to be highly energy and water efficient, as discussed further below.
• Affordability . 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 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 new homes that are not ENERGY STAR
certified.
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;
• Providing access to interactive floor plans and homesite maps for their desired community;
• Conducting virtual appointments and tours of the model homes and design studios;
• Utilizing online tools to serve homebuyers where possible; and
• 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. 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 :
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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; and understand local regulatory environments. Our division management
teams exercise considerable autonomy in identifying land acquisition opportunities; developing land and communities;
implementing product, marketing and sales strategies; 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; purchasing and national contracts; treasury and cash management; land acquisition approval; risk and litigation
management; accounting and financial reporting; internal audit and compliance activities; information technology (“IT”)
systems; human resources strategy; marketing; and investor and media relations.
Community Development and Land Inventory Management
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 2025, 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.
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 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.
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.
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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; assessment of site development required, including any work needed to comply with storm water
regulations; 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.
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)
Total Land
Owned or Under Option
2024
2023
2024
2023
2024
2023
2024
2023
West Coast
2,286
2,343
10,794
9,784
10,876
6,093
23,956
18,220
Southwest
1,303
1,567
4,078
4,365
7,736
1,085
13,117
7,017
Central
1,575
2,156
9,866
10,981
9,615
4,191
21,056
17,328
Southeast
1,360
1,569
7,600
8,035
9,614
3,807
18,574
13,411
Total
6,524
7,635
32,338
33,165
37,841
15,176
76,703
55,976
(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 :
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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 sales 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. 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.
Raw Materials . Outside of land, the principal raw materials used in our production process are concrete and forest
products. Other primary materials used in home construction include drywall, and plumbing and electrical items. We source
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
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.
Backlog
Our “backlog” consists of homes that are under a sales 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 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.
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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
Competition. The homebuilding industry and housing market are highly competitive with respect to selling homes;
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, build time, and the design choices and options 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 (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. 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 may continue in 2025 , particularly if and as there is greater competition for these resources
across a disrupted global supply chain.
Seasonality. 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
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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
Net Orders
2024
25 %
30 %
24 %
21 %
2023
19 %
36 %
28 %
17 %
2022
39 %
36 %
19 %
6 %
Homes Delivered
2024
21 %
25 %
26 %
28 %
2023
21 %
28 %
25 %
26 %
2022
21 %
25 %
26 %
28 %
Housing Revenues
2024
21 %
25 %
25 %
29 %
2023
22 %
27 %
25 %
26 %
2022
20 %
25 %
27 %
28 %
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; household demographics ( e.g. , large families or working
professionals; income levels); geographic context ( e.g. , urban or suburban; availability of reasonably priced finished lots;
development constraints; residential density); 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; the size of our homes; 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; 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.
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.
Our Culture. 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
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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.
Promoting High Ethical Standards. 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
year. 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.
Inclusion. 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
employees. 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 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.
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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
engagement.
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. In
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. According to
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. 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% 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
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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 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 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 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; and
• 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
employees.
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
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 wider
community contributions that intersect with the nature of our business. Our KB Cares philanthropic program has four key focus
areas: shelter, community, sustainability/environment and construction skills/employment. KB Cares helps to build strong
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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; 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 . 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
• 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.
• Stockholders may communicate with us and our board.
• We proactively engage with stockholders year-round. Since 2021,
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.
• Directors have extensive and relevant experience and skills.
• 90% of directors are independent; 50% are women or racial or ethnic
minorities.
• 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 ”).
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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 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 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.