KB HOME 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA KB HOME INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Number Consolidated Statements of Operations for the Years Ended November 30, 2025, 2024 and 2023 58 Consolidated Statements of Comprehensive Income for the Years Ended November 30, 2025, 2024 and 2023 59 Consolidated Balance Sheets as of November 30, 2025 and 2024 60 Consolidated Statements of Stockholders’ Equity for the Years Ended November 30, 2025, 2024 and 2023 61 Consolidated Statements of Cash Flows for the Years Ended November 30, 2025, 2024 and 2023 62 Notes to Consolidated Financial Statements 63 Report of Independent Registered Public Accounting Firm ( Ernst & Young LLP , Los Angeles, CA , PCAOB ID: 42 ) 95 Separate combined financial statements of our unconsolidated joint venture activities have been omitted because, if considered in the aggregate, they would not constitute a significant subsidiary as defined by Rule 3-09 of Regulation S-X. 58 KB HOME CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) Years Ended November 30, 2025 2024 2023 Total revenues $ 6,236,214 $ 6,930,086 $ 6,410,629 Homebuilding: Revenues $ 6,211,905 $ 6,902,239 $ 6,381,106 Construction and land costs ( 5,058,660 ) ( 5,451,483 ) ( 5,030,275 ) Selling, general and administrative expenses ( 646,182 ) ( 686,848 ) ( 632,094 ) Operating income 507,063 763,908 718,737 Interest income and other 7,386 32,101 13,759 Equity in income (loss) of unconsolidated joint ventures 5,715 6,019 ( 713 ) Loss on early extinguishment of debt ( 954 ) — — Homebuilding pretax income 519,210 802,028 731,783 Financial services: Revenues 24,309 27,847 29,523 Expenses ( 6,120 ) ( 6,133 ) ( 5,726 ) Equity in income of unconsolidated joint ventures 16,790 27,176 15,697 Financial services pretax income 34,979 48,890 39,494 Total pretax income 554,189 850,918 771,277 Income tax expense ( 125,400 ) ( 195,900 ) ( 181,100 ) Net income $ 428,789 $ 655,018 $ 590,177 Earnings per share: Basic $ 6.28 $ 8.70 $ 7.25 Diluted $ 6.15 $ 8.45 $ 7.03 Weighted average shares outstanding: Basic 67,905 74,753 80,842 Diluted 69,254 76,955 83,380 See accompanying notes. 59 KB HOME CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands) Years Ended November 30, 2025 2024 2023 Net income $ 428,789 $ 655,018 $ 590,177 Other comprehensive income: Postretirement benefit plan adjustments: Net actuarial gain arising during the period 464 416 2,720 Amortization of net actuarial gain ( 237 ) ( 461 ) ( 112 ) Other comprehensive income (loss) before tax 227 ( 45 ) 2,608 Income tax expense related to items of other comprehensive income (loss) ( 61 ) 12 ( 704 ) Other comprehensive income (loss), net of tax 166 ( 33 ) 1,904 Comprehensive income $ 428,955 $ 654,985 $ 592,081 See accompanying notes. 60 KB HOME CONSOLIDATED BALANCE SHEETS (In Thousands, Except Shares) November 30, 2025 2024 Assets Homebuilding: Cash and cash equivalents $ 228,614 $ 597,973 Receivables 350,636 377,533 Inventories 5,670,802 5,528,020 Investments in unconsolidated joint ventures 72,436 67,020 Property and equipment, net 101,457 90,359 Deferred tax assets, net 88,665 102,421 Other assets 107,833 105,920 6,620,443 6,869,246 Financial services 59,809 66,923 Total assets $ 6,680,252 $ 6,936,169 Liabilities and stockholders’ equity Homebuilding: Accounts payable $ 351,261 $ 384,894 Accrued expenses and other liabilities 731,946 796,261 Notes payable 1,692,977 1,691,679 2,776,184 2,872,834 Financial services 3,210 2,719 Stockholders’ equity: Preferred stock — $ 1.00 par value; 10,000,000 shares authorized; none issued — — Common stock — $ 1.00 par value; 290,000,000 shares authorized at November 30, 2025 and 2024; 74,477,254 and 74,409,977 shares issued at November 30, 2025 and 2024, respectively 74,477 74,410 Paid-in capital 863,718 862,049 Retained earnings 3,629,638 3,269,423 Accumulated other comprehensive loss ( 3,538 ) ( 3,704 ) Treasury stock, at cost — 11,303,643 and 2,253,156 shares at November 30, 2025 and 2024, respectively ( 663,437 ) ( 141,562 ) Total stockholders’ equity 3,900,858 4,060,616 Total liabilities and stockholders’ equity $ 6,680,252 $ 6,936,169 See accompanying notes. 61 KB HOME CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In Thousands) Years Ended November 30, 2025, 2024 and 2023 Number of Shares Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Grantor Stock Ownership Trust Treasury Stock Total Stockholders’ Equity Common Stock Grantor Stock Ownership Trust Treasury Stock Balance at November 30, 2022 100,711 ( 6,705 ) ( 10,016 ) $ 100,711 $ 836,260 $ 3,143,578 $ ( 5,575 ) $ ( 72,718 ) $ ( 341,461 ) $ 3,660,795 Net income — — — — — 590,177 — — — 590,177 Other comprehensive income, net of tax — — — — — — 1,904 — — 1,904 Dividends on common stock — — — — — ( 56,831 ) — — — ( 56,831 ) Employee stock options/other 565 — — 565 8,292 — — — — 8,857 Stock awards — — 927 — ( 33,471 ) — — — 33,471 — Stock-based compensation — — — — 34,612 — — — — 34,612 Stock repurchases, including excise tax — — ( 9,244 ) — — — — — ( 415,136 ) ( 415,136 ) Tax payments associated with stock-based compensation awards — — ( 371 ) — — — — — ( 14,238 ) ( 14,238 ) Balance at November 30, 2023 101,276 ( 6,705 ) ( 18,704 ) 101,276 845,693 3,676,924 ( 3,671 ) ( 72,718 ) ( 737,364 ) 3,810,140 Net income — — — — — 655,018 — — — 655,018 Other comprehensive loss, net of tax — — — — — — ( 33 ) — — ( 33 ) Dividends on common stock — — — — — ( 71,554 ) — — — ( 71,554 ) Employee stock options/other 691 — — 691 9,742 — — — — 10,433 Stock awards — — 682 — ( 27,856 ) — — — 27,856 — Stock-based compensation — — — — 34,470 — — — — 34,470 Stock repurchases, including excise tax — — ( 4,725 ) — — — — — ( 352,842 ) ( 352,842 ) Tax payments associated with stock-based compensation awards — — ( 358 ) — — — — — ( 25,016 ) ( 25,016 ) Termination of grantor stock ownership trust — 6,705 ( 6,705 ) — — — — 72,718 ( 72,718 ) — Retirement of treasury stock ( 27,557 ) — 27,557 ( 27,557 ) — ( 990,965 ) — — 1,018,522 — Balance at November 30, 2024 74,410 — ( 2,253 ) 74,410 862,049 3,269,423 ( 3,704 ) — ( 141,562 ) 4,060,616 Net income — — — — — 428,789 — — — 428,789 Other comprehensive income, net of tax — — — — — — 166 — — 166 Dividends on common stock — — — — — ( 68,574 ) — — — ( 68,574 ) Employee stock options/other 67 — — 67 1,003 — — — — 1,070 Stock awards — — 688 — ( 45,572 ) — — — 45,572 — Stock-based compensation — — — — 46,238 — — — — 46,238 Stock repurchases, including excise tax — — ( 9,385 ) — — — — — ( 543,583 ) ( 543,583 ) Tax payments associated with stock-based compensation awards — — ( 354 ) — — — — — ( 23,864 ) ( 23,864 ) Balance at November 30, 2025 74,477 — ( 11,304 ) $ 74,477 $ 863,718 $ 3,629,638 $ ( 3,538 ) $ — $ ( 663,437 ) $ 3,900,858 See accompanying notes. 62 KB HOME CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Years Ended November 30, 2025 2024 2023 Cash flows from operating activities: Net income $ 428,789 $ 655,018 $ 590,177 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of unconsolidated joint ventures ( 22,505 ) ( 33,195 ) ( 14,984 ) Distributions of earnings from unconsolidated joint ventures 33,240 26,775 23,171 Amortization of debt issuance costs 3,638 3,483 3,381 Depreciation and amortization 37,303 37,272 36,413 Deferred income taxes 13,756 17,054 41,393 Gain on sale of investment — ( 12,516 ) — Loss on early extinguishment of debt 954 — — Stock-based compensation 46,238 34,470 34,612 Inventory impairments and land option contract abandonments 32,051 4,597 11,424 Changes in assets and liabilities: Receivables 4,996 16,586 ( 12,919 ) Inventories ( 179,457 ) ( 385,795 ) 426,812 Accounts payable, accrued expenses and other liabilities ( 75,166 ) ( 7,241 ) ( 62,200 ) Other, net 11,845 6,214 5,419 Net cash provided by operating activities 335,682 362,722 1,082,699 Cash flows from investing activities: Contributions to unconsolidated joint ventures ( 16,362 ) ( 14,509 ) ( 27,694 ) Return of investments in unconsolidated joint ventures 2,965 1,992 5,100 Proceeds from sale of investment — 1,709 — Purchases of property and equipment, net ( 48,400 ) ( 39,311 ) ( 35,468 ) Net cash used in investing activities ( 61,797 ) ( 50,119 ) ( 58,062 ) Cash flows from financing activities: Borrowings under revolving credit facility 740,000 — 170,000 Repayments under revolving credit facility ( 740,000 ) — ( 320,000 ) Payment of issuance costs ( 9,891 ) — — Payments on mortgages and land contracts due to land sellers and other loans ( 73 ) ( 917 ) ( 3,843 ) Issuance of common stock under employee stock plans 1,070 10,433 8,857 Stock repurchases and excise taxes paid ( 541,303 ) ( 353,698 ) ( 411,438 ) Tax payments associated with stock-based compensation awards ( 23,864 ) ( 25,016 ) ( 14,238 ) Payments of cash dividends ( 68,574 ) ( 71,554 ) ( 56,831 ) Net cash used in financing activities ( 642,635 ) ( 440,752 ) ( 627,493 ) Net increase (decrease) in cash and cash equivalents ( 368,750 ) ( 128,149 ) 397,144 Cash and cash equivalents at beginning of year 599,193 727,342 330,198 Cash and cash equivalents at end of year $ 230,443 $ 599,193 $ 727,342 See accompanying notes. 63 KB HOME NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 . Summary of Significant Accounting Policies Operations. KB Home is a builder of attached and detached sing le-family residential homes, townhomes and condominiums. As of November 30, 2025 , we conducted ongoing operations in Arizona, California, Colorado, Florida, Idaho, Nevada, North Carolina, Texas and Washington. We also offer property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to our homebuyers in the same markets as our homebuilding reporting segments, and provide title services in the majority of our markets located within our Southwest, Central and Southeast homebuilding reporting segments. W e offer mortgage banking services, including mortgage loan originations, to our homebuyers indirectly through KBHS , which is an unconsolidated joint venture between us and a third party. Basis of Presentation. Our consolidated financial statements have been prepared in accordance with GAAP and include our accounts and those of the consolidated subsidiaries in which we have a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. Investments in unconsolidated joint ventures in which we have less than a controlling financial interest are accounted for using the equity method. Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents. We consider all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. Our cash equivalents totaled $ 152.6 million at November 30, 2025 and $ 385.1 million at November 30, 2024 . At November 30, 2025 and 2024 , our cash equivalents were mainly invested in interest-bearing bank deposit accounts and money market funds . Receivables. We record receivables net of an allowance for doubtful accounts. This allowance for potential losses is established or maintained for expected uncollectible receivables. The allowance is estimated based on our evaluation of the receivables, taking into account historical collection experience, general economic conditions, specific credit risk of the counterparties and other relevant information. Property and Eq uipment and Depreciation. Property and equipment are recorded at cost and are depreciated using the straight-line method over their estimated useful lives as follows: computer software and equipment – two to 15 years ; model furnishings and sales office improvements – two to three years ; office furniture and equipment – three to 10 years ; and leasehold improvements – life of the lease. Repair and maintenance costs are expensed as incurred. Depreciation expense totaled $ 37.3 million in 2025 , $ 37.3 million in 2024 and $ 36.4 million in 2023 . Investments in Equity Securities. We have elected to measure our investments in equity securities without readily determinable fair values at cost less impairment, if any, including adjustments for observable price changes in orderly transactions for an identical or similar investment of the same issuer. These investments, which totaled $ 15.2 million at both November 30, 2025 and 2024 , are included in other assets in our consolidated balance sheets. Homebuilding Operations. We recognize homebuilding revenue by applying the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy a performance obligation. Our home sale transactions are made pursuant to contracts under which we typically have a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. Revenues from home sales are recognized when we have satisfied the performance obligation within the sales contract, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under our home sales contracts, we typically receive an initial cash deposit from the homebuyer at the time the sales contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. Customer deposits related to sold but undelivered homes are included in accrued expenses and other liabilities. Concurrent with the recognition of revenues in our consolidated statements of operations, all sales incentives are recorded as a reduction of revenues. Sales incentives vary by community and may be in the form of price concessions on the selling price of a home, mortgage-related concessions, closing cost allowances and/or free products or services. When we provide sales incentives in the form of free products or services to homebuyers, their costs are reflected as construction and land costs because such incentives are identified in our home sales contracts with homebuyers as an intrinsic part of our single 64 performance obligation to deliver and transfer title to their home for the transaction price stated in the contracts. Cash proceeds from home sale closings held by third-party escrow agents for our benefit, typically for less than five days, are considered deposits in-transit and classified as cash. We may periodically elect to sell parcels of land to third parties if such assets no longer fit into our strategic operating plans or are zoned for non-residential development. Land sale transactions are made pursuant to contracts under which we typically have a performance obligation(s) to deliver specified land parcels to the buyer when closing conditions are met. We evaluate each land sales contract to determine our performance obligation(s) under the contract, including whether we have a distinct promise to perform post-closing land development work that is material within the context of the contract, and use objective criteria to determine our completion of the applicable performance obligation(s), whether at a point in time or over time. Revenues from land sales are recognized when we have satisfied the performance obligation(s) within the sales contract, which is generally when title to and possession of the land and the risks and rewards of ownership are transferred to the land buyer on the closing date. Under our land sales contracts, we typically receive an initial cash deposit from the buyer at the time the contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. In the limited circumstances where we provide financing to the land buyer, we determine that collectability of the receivable is reasonably assured before we recognize revenue. In instances where we have a distinct and material performance obligation(s) within the context of a land sales contract to perform land development work after the closing date, a portion of the transaction price under the contract is allocated to such performance obligation(s) and is recognized as revenue over time based upon our estimated progress toward the satisfaction of the performance obligation(s). We generally measure our progress based on our costs incurred relative to the total costs expected to satisfy the performance obligation(s). While the payment terms for such a performance obligation(s) vary, we generally receive the final payment when we have completed our land development work to the specifications detailed in the applicable land sales contract and it has been accepted by the land buyer. Homebuilding revenues include forfeited deposits, which occur when home sales or land sales contracts, if any, that involve a non-refundable deposit are cancelled. Revenues from forfeited deposits are immaterial. Within our homebuilding operations, substantially all of our contracts with customers and the related performance obligations have an original expected duration of one year or less. Construction and land costs are comprised of direct and allocated costs, including estimated future costs for the limited warranty we provide on our homes, and certain amenities within a community. Land acquisition, land development and other common costs are generally allocated on a relative fair value basis to the homes or lots within the applicable community or land parcel. Land acquisition and land development costs include related interest and real estate taxes. Disaggregation of Revenues. Our homebuilding operations accounted for 99.6 % , 99.6 % and 99.5 % of our total revenues for the years ended November 30, 2025 , 2024 and 2023 , respectively, with most of those revenues generated from home sales contracts with customers. Due to the nature of our revenue-generating activities, we believe the disaggregation of revenues as reported in our consolidated statements of operations, and as disclosed by homebuilding reporting segment in Note 2 – Segment Information and for our financial services reporting segment in Note 3 – Financial Services , fairly depicts how the nature, amount, timing and uncertainty of cash flows are affected by economic factors. Inventories . H ousing and land inventories are stated at cost, unless the carrying value is determined not to be recoverable, in which case the affected inventories are written down to fair value or fair value less associated costs to sell. Real estate assets, such as our housing and land inventories, are tested for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Recoverability is measured by comparing the carrying value of an asset to the undiscounted future net cash flows expected to be generated by the asset. These impairment evaluations are significantly impacted by estimates for the amounts and timing of future revenues, costs and expenses, and other factors. If the carrying value of a real estate asset is determined not to be recoverable, the impairment charge to be recognized is measured by the amount by which the carrying value of the affected asset exceeds its estimated fair value. For land held for sale, if the fair value less associated costs to sell exceeds the asset’s carrying value, no impairment charge is recognized. Capitalized Interest. Interest is capitalized to inventories while the related communities or land parcels are being actively developed and until homes are completed or the land is available for immediate sale. Capitalized interest is amortized to construction and land costs as the related inventories are delivered to homebuyers or land buyers (as applicable). We do not capitalize interest on land held for future development and land held for sale. F air Value Measurements. Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. For these real estate assets, fair value is determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques. 65 Our financial instruments consist of cash and cash equivalents, corporate-owned life insurance, outstanding borrowings under the Credit Facility , if any, and the Term Loan , senior notes, and mortgages and land contracts due to land sellers and other loans. Fair value measurements of financial instruments are determined by various market data and other valuation techniques as appropriate. When available, we use quoted market prices in active markets to determine fair value. Financial Servi ces Operations. Our financial services reporting segment, which includes the operations of KB HOME Mortgage Company, generates revenues primarily from insurance commissions and title services. Revenues from title services are recognized when policies are issued, which generally occurs at the time each applicable home sale is closed. We receive commissions from various third-party insurance carriers for arranging for the carriers to provide homeowner and other insurance policies for our homebuyers that elect to obtain such coverage. In addition, each time a homebuyer renews their insurance policy with the insurance carrier, we receive a renewal commission. Revenues from insurance commissions are recognized when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. As our performance obligations for policy renewal commissions are satisfied upon issuance of the initial insurance policy, insurance commissions for renewals are considered variable consideration. Accordingly, we estimate the probable future renewal commissions when an initial policy is issued and record a corresponding contract asset and insurance commission revenues. We estimate the amount of variable consideration based on historical renewal trends and constrain the estimate such that it is probable that a significant reversal of cumulative recognized revenue will not occur. We also consider the likelihood and magnitude of a potential future reversal of revenue and update our assessment at the end of each reporting period. The contract assets for estimated future renewal commissions are included in other assets within our financial services reporting segment. Warranty Costs. We provide a limited warranty on all of our homes. We estimate the costs that may be incurred under each limited warranty and record a liability in the amount of such costs at the time the revenue associated with the sale of each home is recognized. Our primary assumption in estimating the amounts we accrue for warranty costs is that historical claims experience is a strong indicator of future claims experience. Factors that affect our warranty liability include the number of homes delivered, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our accrued warranty liability and adjust the amount as necessary based on our assessment. Our warranty liability is presented on a gross basis for all years without consideration of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimates of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable. Self- Insurance. We self-insure a portion of our overall risk through the use of a captive insurance subsidiary. We record liabilities based on the estimated costs required to cover reported claims, claims incurred but not yet reported, and claim adjustment expenses. These estimated costs are based on an actuarial analysis of our historical claims and expense data, as well as industry data. Our self-insurance liability is presented on a gross basis for all years without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any . Estimates of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable. Community Sales Office and Other Marketing- and Model Home-Related Costs. Community sales office and other marketing- and model home-related costs are either recorded as inventories, capitalized as property and equipment, or expensed to selling, general and administrative expenses as incurred. Costs related to the construction of a model home, inclusive of design choices and options that will be sold as part of the home, are recorded as inventories and recognized as construction and land costs when the model home is delivered to a homebuyer. Costs to furnish and ready a model home or on-site community sales facility that will not be sold as part of the model home, such as costs for model furnishings, community sales office and model complex grounds, sales office construction and sales office furniture and equipment, are capitalized as property and equipment under “model furnishings and sales office improvements.” Model furnishings and sales office improvements are depreciated to selling, general and administrative expenses over their estimated useful lives. Other costs related to the marketing of a community, removing the on-site community sales facility and readying a completed (model) home for sale are expensed to selling, general and administrative expenses as incurred. Advertising Costs. We expense advertising costs as incurred. We incurred advertising costs of $ 42.0 million in 2025 , $ 39.9 million in 2024 and $ 34.2 million in 2023 . Legal Fees. Legal fees associated with litigation and similar proceedings that are not expected to provide a benefit in future periods are generally expensed as incurred. Legal fees associated with land acquisition and development and other activities that are expected to provide a benefit in future periods are capitalized to inventories in our consolidated balance sheets as incurred. We expensed legal fees of $ 8.3 million in 2025 , $ 8.7 million in 2024 and $ 10.4 million in 2023 . 66 Stock-Based Compensation. We measure and recognize compensation expense associated with our grant of equity-based awards at an amount equal to the fair value of share-based payments granted under compensation arrangements over the vesting period. For certain equity-based awards granted in October 2025 containing new provisions that accelerate or continue vesting upon retirement, we recognize compensation expense over the period from the grant date to the date that retirement eligibility is achieved, if that is expected to occur during the standard vesting period. Additionally, for such awards granted to retirement- eligible employees, the full compensation cost of the award is recognized immediately upon grant. We estimate the fair value of stock options granted using the Black-Scholes option-pricing model with assumptions based primarily on historical data. We estimate the fair value of other equity-based awards using the closing price of our common stock on the grant date. For PSU s, we recognize compensation expense ratably over the vesting period when it is probable that stated performance targets will be achieved and record cumulative adjustments in the period in which estimates change. We account for forfeitures of equity- based awards as they occur. Income Taxes. The provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are evaluated on a quarterly basis to determine if adjustments to the valuation allowance are required. This evaluation is based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of deferred tax assets in our consolidated balance sheets depends on applicable income tax rates. Accumulated Other Comprehensive Loss. The accumulated balances of other comprehensive loss in the consolidated balance sheets as of November 30, 2025 and 2024 were comprised solely of adjustments recorded directly to accumulated other comprehensive loss related to our benefit plan obligations. Such adjustments are made annually as of November 30, when our benefit plan obligations are remeasured. Earnings Per Share. We compute earnings per share using the two-class method, which is an allocation of earnings between the holders of common stock and a company’s participating security holders. Our outstanding nonvested shares of restricted stock contain non-forfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. We had no other participating securities at November 30, 2025 , 2024 or 2023 . Adoption of New Accounting Pronouncement. In November 2023, the FASB issued Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ ASU 2023-07 ”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with retrospective application required for all prior periods presented. We adopted ASU 2023-07 for 2025 and included the related disclosures in Note 2 – Segment Information . The adoption of this guidance, which is related to disclosures only, had no impact on our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted. In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures. In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the consolidated financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The guidance is to be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures. 67 In September 2025, the FASB issued Accounting Standards Update No. 2025-06, “Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”), which modernizes the accounting for costs related to internal-use software by removing all references to project stages and clarifying the threshold entities apply to begin capitalizing costs. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, and may be applied using a prospective, retrospective or modified transition approach. Early adoption is permitted as of the beginning of an annual reporting period. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures. Note 2 . Segment Information We operate two principal businesses: homebuilding and financial services. An operating segment is defined as a component of an enterprise for which separate financial information is available and for which segment results are evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Each of our homebuilding divisions has been identified as an operating segment. Our homebuilding operating segments have been aggregated into four homebuilding reporting segments, based primarily on similarities in economic and geographic characteristics, product types, regulatory environments, methods used to sell and construct homes and land acquisition characteristics. Our CODM, identified as our chief executive officer and chief operating officer for purposes of our reportable segment disclosures, regularly reviews operating results for the individual operating segments that comprise our reporting segments. The CODM evaluates the performance of our homebuilding operating segments primarily based on their respective housing gross profit margin and pretax income (loss). These profitability measures are used by the CODM in making operating and capital resource allocation decisions at the segment level, including their review and approval of land acquisition and land sale transactions. The CODM also uses these measures in business planning and forecasting, and considers budget-to-actual variances for these measures when assessing segment performance. In addition, segment pretax income (loss) is used by the CODM in determining the compensation of certain employees. As of November 30, 2025 , our homebuilding reporting segments conducted ongoing operations in the following states: West Coast: California, Idaho and Washington Southwest: Arizona and Nevada Central: Colorado and Texas Southeast: Florida and North Carolina Our homebuilding reporting segments are engaged in the acquisition and development of land primarily for residential purposes and offer a wide variety of homes that are designed to appeal to first-time, first move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land. We also have one financial services reporting segment. The CODM reviews pretax income for our financial services segment to assess performance and to inform decisions about the allocation of resources to the segment and as to financial services product offerings. Our financial services reporting segment earns revenues primarily from insurance commissions and from the provision of title services. We offer mortgage banking services, including mortgage loan originations, to our homebuyers indirectly through KBHS , our unconsolidated joint venture with GR Alliance , a subsidiary of Guaranteed Rate, Inc. We and GR Alliance each have a 50.0 % ownership interest, with GR Alliance providing management oversight of KBHS ’ operations. The financial services reporting segment is separately reported in our consolidated financial statements and in Note 3 – Financial Services . Corporate and other is a non-operating segment that develops and oversees the implementation of company-wide strategic initiatives and provides support to our reporting segments by centralizing certain administrative functions. Corporate management is responsible for, among other things, evaluating and selecting the geographic markets in which we operate, consistent with our overall business strategy; allocating capital resources to markets for land acquisition and development activities; making major personnel decisions related to employee compensation and benefits; and monitoring the financial and operational performance of our divisions. Corporate and other includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate and other is allocated to our homebuilding reporting segments. 68 Our reporting segments follow the same accounting policies used for our consolidated financial statements as described in Note 1 – Summary of Significant Accounting Policies . The results of each reporting segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented, nor are they indicative of the results to be expected in future perio d s. The following tables present certain statements of operations information relating to our homebuilding reporting segments (in thousands): Year Ended November 30, 2025 West Coast Southwest Central Southeast Corporate and Other Total Revenues: Housing $ 2,690,807 $ 1,245,446 $ 1,176,854 $ 1,097,453 $ — $ 6,210,560 Land 858 — — 487 — 1,345 Total 2,691,665 1,245,446 1,176,854 1,097,940 — 6,211,905 Construction and land costs: Housing ( 2,205,357 ) ( 940,796 ) ( 960,962 ) ( 910,342 ) ( 7,804 ) ( 5,025,261 ) Land ( 812 ) — — ( 536 ) — ( 1,348 ) Inventory-related charges ( 4,324 ) ( 1,642 ) ( 20,407 ) ( 5,678 ) — ( 32,051 ) Total ( 2,210,493 ) ( 942,438 ) ( 981,369 ) ( 916,556 ) ( 7,804 ) ( 5,058,660 ) Gross profits: Housing (a) 481,126 303,008 195,485 181,433 ( 7,804 ) 1,153,248 Land 46 — — ( 49 ) — ( 3 ) Total 481,172 303,008 195,485 181,384 ( 7,804 ) 1,153,245 Marketing expenses ( 60,972 ) ( 23,615 ) ( 39,179 ) ( 30,427 ) ( 9,276 ) ( 163,469 ) Commission expenses ( 77,451 ) ( 39,906 ) ( 50,874 ) ( 43,412 ) — ( 211,643 ) General and administrative expenses ( 43,213 ) ( 25,677 ) ( 31,941 ) ( 29,542 ) ( 140,697 ) ( 271,070 ) Operating income (loss) 299,536 213,810 73,491 78,003 ( 157,777 ) 507,063 Other (b) 5,953 ( 215 ) 13 ( 3 ) 6,399 12,147 Homebuilding pretax income (loss) $ 305,489 $ 213,595 $ 73,504 $ 78,000 $ ( 151,378 ) $ 519,210 Housing gross profit margin as a percentage of housing revenues 17.9 % 24.3 % 16.6 % 16.5 % — % 18.6 % Year Ended November 30, 2024 West Coast Southwest Central Southeast Corporate and Other Total Revenues: Housing $ 2,931,648 $ 1,309,950 $ 1,449,632 $ 1,207,437 $ — $ 6,898,667 Land 410 — 3,162 — — 3,572 Total 2,932,058 1,309,950 1,452,794 1,207,437 — 6,902,239 Construction and land costs: Housing ( 2,364,046 ) ( 984,463 ) ( 1,133,497 ) ( 956,136 ) ( 6,643 ) ( 5,444,785 ) Land ( 21 ) — ( 2,080 ) — — ( 2,101 ) Inventory-related charges ( 2,941 ) ( 267 ) ( 843 ) ( 546 ) — ( 4,597 ) Total ( 2,367,008 ) ( 984,730 ) ( 1,136,420 ) ( 956,682 ) ( 6,643 ) ( 5,451,483 ) Gross profits: Housing (a) 564,661 325,220 315,292 250,755 ( 6,643 ) 1,449,285 Land 389 — 1,082 — — 1,471 Total 565,050 325,220 316,374 250,755 ( 6,643 ) 1,450,756 Marketing expenses ( 55,057 ) ( 24,489 ) ( 43,341 ) ( 27,668 ) ( 7,553 ) ( 158,108 ) Commission expenses ( 83,492 ) ( 42,682 ) ( 63,532 ) ( 48,621 ) — ( 238,327 ) General and administrative expenses ( 56,887 ) ( 29,267 ) ( 38,069 ) ( 31,353 ) ( 134,837 ) ( 290,413 ) Operating income (loss) 369,614 228,782 171,432 143,113 ( 149,033 ) 763,908 Other (b) 6,252 ( 242 ) 31 22 32,057 38,120 Homebuilding pretax income (loss) $ 375,866 $ 228,540 $ 171,463 $ 143,135 $ ( 116,976 ) $ 802,028 Housing gross profit margin as a percentage of housing revenues 19.3 % 24.8 % 21.7 % 20.8 % — % 21.0 % 69 Year Ended November 30, 2023 West Coast Southwest Central Southeast Corporate and Other Total Revenues: 2 0 2 4 Housing $ 2,321,093 $ 1,163,913 $ 1,827,264 $ 1,058,151 $ — $ 6,370,421 Land — 6,035 4,650 — — 10,685 Total 2,321,093 1,169,948 1,831,914 1,058,151 — 6,381,106 Construction and land costs: Housing ( 1,883,520 ) ( 891,121 ) ( 1,413,021 ) ( 811,756 ) ( 9,941 ) ( 5,009,359 ) Land — ( 4,911 ) ( 4,581 ) — — ( 9,492 ) Inventory-related charges ( 4,902 ) ( 57 ) ( 2,461 ) ( 4,004 ) — ( 11,424 ) Total ( 1,888,422 ) ( 896,089 ) ( 1,420,063 ) ( 815,760 ) ( 9,941 ) ( 5,030,275 ) Gross profits: Housing (a) 432,671 272,735 411,782 242,391 ( 9,941 ) 1,349,638 Land — 1,124 69 — — 1,193 Total 432,671 273,859 411,851 242,391 ( 9,941 ) 1,350,831 Marketing expenses ( 50,318 ) ( 23,917 ) ( 41,020 ) ( 22,677 ) ( 5,645 ) ( 143,577 ) Commission expenses ( 70,060 ) ( 37,472 ) ( 74,048 ) ( 41,163 ) — ( 222,743 ) General and administrative expenses ( 45,334 ) ( 23,846 ) ( 38,180 ) ( 31,422 ) ( 126,992 ) ( 265,774 ) Operating income (loss) 266,959 188,624 258,603 147,129 ( 142,578 ) 718,737 Other (b) ( 730 ) ( 127 ) 20 145 13,738 13,046 Homebuilding pretax income (loss) $ 266,229 $ 188,497 $ 258,623 $ 147,274 $ ( 128,840 ) $ 731,783 Housing gross profit margin as a percentage of housing revenues 18.6 % 23.4 % 22.5 % 22.9 % — % 21.2 % (a) Housing gross profits are calculated by subtracting housing construction and land costs and inventory-related charges from housing revenues . (b) Other is primarily comprised of interest income, interest expense and equity in income (loss) of unconsolidated joint ventures. For the year ended November 30, 2024 , Corporate and Other also includes a gain associated with the sale of our ownership interest in a privately held technology company, as described in Note 11 – Other Assets . The following table summarizes the equity in income (loss) of unconsolidated joint ventures by homebuilding reporting segment (in thousands): Years Ended November 30, 2025 2024 2023 Equity in income (loss) of unconsolidated joint ventures: West Coast $ 5,937 $ 6,241 $ ( 731 ) Southwest ( 219 ) ( 244 ) ( 127 ) Central — — — Southeast ( 3 ) 22 145 Total $ 5,715 $ 6,019 $ ( 713 ) The following tables present certain balance sheet information relating to our homebuilding reporting segments (in thousands): November 30, 2025 2024 Inventories: West Coast $ 3,048,056 $ 2,915,543 Southwest 969,260 845,910 Central 758,962 839,920 Southeast 894,524 926,647 Total $ 5,670,802 $ 5,528,020 70 November 30, 2025 2024 Investments in unconsolidated joint ventures: West Coast $ 68,708 $ 59,286 Southwest 1,180 5,209 Central — — Southeast 2,548 2,525 Total $ 72,436 $ 67,020 Assets: West Coast $ 3,300,212 $ 3,178,188 Southwest 1,019,475 915,072 Central 910,307 1,001,393 Southeast 943,846 972,993 Corporate and other 446,603 801,600 Total $ 6,620,443 $ 6,869,246 Note 3 . Financial Services The following tables present financial information relating to our financial services reporting segment (in thousands): Years Ended November 30, 2025 2024 2023 Revenues Insurance commissions $ 14,240 $ 16,403 $ 17,804 Title services 10,069 11,444 11,719 Total 24,309 27,847 29,523 Expenses General and administrative ( 6,120 ) ( 6,133 ) ( 5,726 ) Operating income 18,189 21,714 23,797 Equity in income of unconsolidated joint ventures 16,790 27,176 15,697 Pretax income $ 34,979 $ 48,890 $ 39,494 November 30, 2025 2024 Assets Cash and cash equivalents $ 1,829 $ 1,220 Receivables 5,569 5,407 Investments in unconsolidated joint ventures 13,231 21,997 Other assets (a) 39,180 38,299 Total assets $ 59,809 $ 66,923 Liabilities Accounts payable and accrued expenses $ 3,210 $ 2,719 Total liabilities $ 3,210 $ 2,719 (a) Other assets at November 30, 2025 and 2024 included $ 39.1 million and $ 38.2 million , respectively, of contract assets for estimated future renewal commissions . 71 Note 4. Earnings Per Share Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts): Years Ended November 30, 2025 2024 2023 Numerator: Net income $ 428,789 $ 655,018 $ 590,177 Less: Distributed earnings allocated to participating securities ( 426 ) ( 527 ) ( 413 ) Less: Undistributed earnings allocated to participating securities ( 2,244 ) ( 4,301 ) ( 3,861 ) Numerator for basic earnings per share 426,119 650,190 585,903 Effect of dilutive securities: Add: Undistributed earnings allocated to participating securities 2,244 4,301 3,861 Less: Undistributed earnings reallocated to participating securities ( 2,200 ) ( 4,179 ) ( 3,744 ) Numerator for diluted earnings per share $ 426,163 $ 650,312 $ 586,020 Denominator: Weighted average shares outstanding — basic 67,905 74,753 80,842 Effect of dilutive securities: Share-based payments 1,349 2,202 2,538 Weighted average shares outstanding — diluted 69,254 76,955 83,380 Basic earnings per share $ 6.28 $ 8.70 $ 7.25 Diluted earnings per share $ 6.15 $ 8.45 $ 7.03 In 2025 , 2024 and 2023 , no outstanding stock options were excluded from the diluted earnings per share calculation. Contingently issuable shares associated with outstanding PSU s were not included in the basic earnings per share calculations for the periods presented, as the applicable vesting conditions had not been satisfied. Note 5. Receivables Receivables consisted of the following (in thousands): November 30, 2025 2024 Due from utility companies, improvement districts and municipalities (a) $ 184,924 $ 173,733 Recoveries related to self-insurance and other legal claims 115,210 136,949 Income taxes receivable 12,108 10,543 Refundable deposits and bonds 9,468 10,667 Other 33,473 49,887 Subtotal 355,183 381,779 Allowance for doubtful accounts ( 4,547 ) ( 4,246 ) Total $ 350,636 $ 377,533 (a) These receivables typically relate to infrastructure improvements we make with respect to our communities. We are generally reimbursed for the cost of such improvements when they are accepted by the utility company, improvement district or municipality, or after certain events occur, depending on the terms of the applicable agreements. These events may include, but are not limited to, the connection of utilities or the issuance of bonds by the respective improvement districts or municipalities . 72 Note 6 . Inventories Inventories consisted of the following (in thousands): November 30, 2025 2024 Homes completed or under construction $ 1,571,793 $ 1,990,113 Land under development 4,099,009 3,537,907 Total $ 5,670,802 $ 5,528,020 Homes completed or under construction is comprised of costs associated with homes completed or in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs. Land development costs include capitalized interest and real estate taxes. When home construction begins, the associated land acquisition and land development costs are included in homes under construction. Land under development at November 30, 2025 and 2024 included land held for future development of $ 27.3 million and $ 21.2 million , respectively. Land held for future development principally relates to land where development activity has been suspended or has not yet begun but is expected to occur in the future. These assets are generally located in submarkets where conditions do not presently support further investment or development, or are subject to a building permit moratorium or regulatory restrictions, or are portions of larger land parcels that we plan to build out over several years and/or that have not yet been entitled. Our interest costs were as follows (in thousands): Years Ended November 30, 2025 2024 2023 Capitalized interest at beginning of year $ 122,387 $ 134,375 $ 145,494 Interest incurred 113,921 105,642 107,086 Interest amortized to construction and land costs (a) ( 110,681 ) ( 117,630 ) ( 118,205 ) Capitalized interest at end of year $ 125,627 $ 122,387 $ 134,375 (a) Interest amortized to construction and land costs for the years ended November 30, 2025 , 2024 and 2023 included nominal amounts related to land sales during the periods. Note 7 . Inventory Impairments and Land Option Contract Abandonments E ach community or land parcel in our owned inventory is assessed to determine if indicators of potential impairment exist. Impairment indicators are assessed separately for each community or land parcel on a quarterly basis and include, but are not limited to, the following: significant decreases in net orders, average selling prices, volume of homes delivered, gross profit margins on homes delivered or projected gross profit margins on homes in backlog or future deliveries; significant increases in budgeted land development and home construction costs or cancellation rates; or projected losses on expected future land sales. If indicators of potential impairment exist for a community or land parcel, the identified asset is evaluated for recoverability. We evaluated 11 , eight and five communities or land parcels for recoverability as of November 30, 2025 , 2024 and 2023 , respectively. The carrying values of those communities or land parcels evaluated as of November 30, 2025 , 2024 and 2023 were $ 154.1 million , $ 139.5 million and $ 89.3 million , respectively. In addition, we evaluated land held for future development for recoverability as of November 30, 2025 , 2024 and 2023 . Inventory impairment charges are included in construction and land costs in our consolidated statements of operations. When an indicator of potential impairment is identified for a community or land parcel, we test the asset for recoverability by comparing the carrying value of the asset to the undiscounted future net cash flows expected to be generated by the asset. The undiscounted future net cash flows are impacted by then-current conditions and trends in the market in which the asset is located as well as factors known to us at the time the cash flows are calculated. These factors may include recent trends in our orders, backlog, cancellation rates and volume of homes delivered, as well as our expectations related to the following: product offerings; market supply and demand, including estimated average selling prices and related price appreciation; and land development, home construction and overhead costs to be incurred and related cost inflation. Our inventory is assessed for potential impairment on a quarterly basis, and the assumptions used are reviewed and adjusted, as necessary, to reflect the market conditions and trends and our expectations at the time each assessment is performed. 73 Given the inherent challenges and uncertainties in forecasting future results, our inventory assessments at the time they are made take into consideration whether a community or land parcel is active, meaning whether it is open for sales and/or undergoing development, or whether it is being held for future development or held for sale. Due to the short-term nature of active communities and land held for sale, as compared to land held for future development, our inventory assessments generally assume the continuation of then-current market conditions, subject to identifying information suggesting significant sustained changes in such conditions. Our assessments of active communities, at the time made, generally anticipate net orders, average selling prices, volume of homes delivered and costs for land development and home construction to continue at or near then-current levels through the particular asset’s estimated remaining life. Inventory assessments for our land held for future development consider then-current market conditions as well as subjective forecasts regarding the timing and costs of land development and home construction and related cost inflation; the product(s) to be offered; and the net orders, volume of homes delivered, and selling prices and related price appreciation of the offered product(s) when an associated community is anticipated to open for sales. We evaluate various factors to develop these forecasts, including the availability of and demand for homes and finished lots within the relevant marketplace; historical, current and expected future sales trends for the marketplace; and third-party data, if available. The estimates, expectations and assumptions used in each of our inventory assessments are specific to each community or land parcel based on what we believe are reasonable forecasts for their particular performance, and may vary among communities or land parcels and may vary over time. We record an inventory impairment charge on a community or land parcel that is active or held for future development when indicators of potential impairment exist and the carrying value of the real estate asset is greater than the undiscounted future net cash flows the asset is expected to generate. These real estate assets are written down to fair value, which is primarily determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques. Inputs used in our calculation of estimated discounted future net cash flows are specific to each affected real estate asset and are based on our expectations for each such asset as of the applicable measurement date, including, among others, expectations related to average selling prices and volume of homes delivered. The discount rates we used were impacted by one or more of the following at the time the calculation was made: the risk-free rate of return; expected risk premium based on estimated land development, home construction and delivery timelines; market risk from potential future price erosion; cost uncertainty due to land development or home construction cost increases; and other risks specific to the asset or conditions in the market in which the asset is located. We record an inventory impairment charge on land held for sale when the carrying value of a land parcel is greater than its fair value. These real estate assets are written down to fair value, less associated costs to sell. The estimated fair values of such assets are generally based on bona fide letters of intent from outside parties, executed sales contracts, broker quotes or similar information. The following table summarizes ranges for significant quantitative unobservable inputs we utilized in our fair value measurements with respect to impaired communities, other than land held for sale, written down to fair value during the years presented: Years Ended November 30, Unobservable Input (a) 2025 2024 2023 Average selling price $ 394,500 - $ 680,300 n/a n/a Deliveries per month 2 - 3 n/a n/a Discount rate 17 % - 20 % n/a n/a (a) Ranges of inputs presented primarily reflect differences between the housing markets where each impacted community is located, rather than fluctuations in prevailing market conditions . Based on the results of our evaluations, we recognized inventory impairment charges of $ 15.5 million in 2025 related to four communities with a post-impairment fair value of $ 38.6 million . We recognized no inventory impairment charges in 2024 or 2023 . The impairment charges in 2025 were principally driven by increased land development costs imposed by a municipality affecting certain communities, and our decisions to make changes in our operational strategies aimed at more quickly monetizing our investment in certain communities, mainly by accelerating the overall pace for selling, building and delivering homes therein. If we change our strategy or if there are changes in market conditions for any given asset, it is possible that we may recognize additional inventory impairment charges. As of November 30, 2025 , the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $ 38.0 million , representing seven communities and various other land parcels. As of November 30, 2024 , the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $ 32.1 million , representing four communities and various other land parcels. 74 Our inventory controlled under land option contracts and other similar contracts is assessed to determine whether it continues to meet our investment return standards. Assessments are made separately for each optioned land parcel on a quarterly basis and are affected by the following factors relative to the market in which the asset is located, among others: current and/or anticipated net orders, average selling prices and volume of homes delivered; estimated land development and home construction costs; and projected profitability on expected future housing or land sales. When a decision is made not to exercise certain land option contracts and other similar contracts due to market conditions and/or changes in our marketing strategy, we write off the related inventory costs, including non-refundable deposits and unrecoverable pre-acquisition costs. Based on the re sults of our assessments, we recognized land option contract abandonment charges of $ 16.5 million in 2025 , $ 4.6 million in 2024 and $ 11.4 million in 2023 . Land option contract abandonment charges are included in construction and land costs in our consolidated statements of operations. The estimated remaining life of each community or land parcel in our inventory depends on various factors, such as the total number of lots remaining; the expected timeline to acquire and entitle land and develop lots to build homes; the anticipated future net order and cancellation rates; and the expected timeline to build and deliver homes sold. While it is difficult to determine a precise timeframe for any particular inventory asset, based on current market conditions and expected delivery timelines, we estimate our inventory assets’ remaining operating lives to range generally from one year to 10 years , and expect to realize, on an overall basis, the majority of our inventory balance as of November 30, 2025 within five years . Due to the judgment and assumptions applied in our inventory impairment and land option contract abandonment assessment processes, and in our estimations of the remaining operating lives of our inventory assets and the realization of our inventory balances, particularly as to land held for future development, it is possible that actual results could differ substantially from those estimated, especially in periods of volatile housing market or economic conditions. Note 8 . Variable Interest Entities Unconsolidated Joint Ventures. We participate in joint ventures from time to time that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. Our investments in these joint ventures may create a variable interest in a variable interest entity (“ VIE ”), depending on the contractual terms of the arrangement. We analyze our joint ventures under the variable interest model to determine whether they are VIE s and, if so, whether we are the primary beneficiary. Based on our analyses, we determined that one of our joint ventures at November 30, 2025 and 2024 was a VIE , but we were not the primary beneficiary of the VIE . Therefore, all of our joint ventures at November 30, 2025 and 2024 were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest. Land Option Contracts and Other Similar Contracts. In the ordinary course of our business, we enter into land option contracts and other similar contracts with third parties and unconsolidated entities to acquire rights to land for the construction of homes. The use of these contracts generally allows us to reduce the market risks associated with direct land ownership and development, and reduce our capital and financial commitments, including interest and other carrying costs. Under these contracts, which generally do not contain provisions requiring our specific performance, we typically make a specified option payment or earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. We analyze each of our land option contracts and other similar contracts under the variable interest model to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, we are required to consolidate a VIE if we are the primary beneficiary. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE ’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE , selling or transferring property owned or controlled by the VIE , or arranging financing for the VIE . As a result of our analyses, we determined that as of November 30, 2025 and 2024 , we were not the primary beneficiary of any VIE s from which we have acquired rights to land under land option contracts and other similar contracts. The following table presents a summary of our interests in land option contracts and other similar contracts (in thousands): November 30, 2025 November 30, 2024 Cash Deposits Aggregate Purchase Price Cash Deposits Aggregate Purchase Price Unconsolidated VIEs $ 51,872 $ 1,320,433 $ 50,469 $ 1,705,542 Other land option contracts and other similar contracts 29,014 742,861 31,470 885,588 Total $ 80,886 $ 2,063,294 $ 81,939 $ 2,591,130 75 In addition to the cash deposits presented in the table above, our exposure to loss related to our land option contracts and other similar contracts with third parties and unconsolidated entities consisted of pre-acquisition costs of $ 62.8 million at November 30, 2025 and $ 34.3 million at November 30, 2024 . These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets. For land option contracts and other similar contracts where the land seller entity is not required to be consolidated under the variable interest model, we consider whether such contracts should be accounted for as financing arrangements. Land option contracts and other similar contracts that may be considered financing arrangements include those we enter into with third-party land financiers or developers in conjunction with such third parties acquiring a specific land parcel(s) on our behalf, at our direction, and those with other landowners where we or our designee make improvements to the optioned land parcel(s) during the applicable option period. For these land option contracts and other similar contracts, we record the remaining purchase price of the associated land parcel(s) in inventories in our consolidated balance sheets with a corresponding financing obligation if we determine that we are effectively compelled to exercise the option to purchase the land parcel(s). In making this determination with respect to a land option contract, we consider the non-refundable deposit(s) we have made and any non- reimbursable expenditures we have incurred for land improvement activities or other items up to the assessment date; additional costs associated with abandoning the contract; and our commitments, if any, to incur non-reimbursable costs associated with the contract. As a result of our evaluations of land option contracts and other similar contracts for financing arrangements, we recorded inventories in our consolidated balance sheets, with a corresponding increase to accrued expenses and other liabilities, of $ 15.4 million at November 30, 2025 and $ 26.0 million at November 30, 2024 . Note 9 . Investments in Unconsolidated Joint Ventures Homebuilding. We have investments in unconsolidated joint ventures that conduct land acquisition, land development and/ or other homebuilding activities in various markets where our homebuilding operations are located. We and our unconsolidated joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures, typically on a pro rata basis, according to our respective equity interests. The obligations to make capital contributions are governed by each such unconsolidated joint venture’s respective operating agreement and related governing documents. Our partners in these unconsolidated joint ventures are unrelated homebuilders, and/or land developers and other real estate entities, or commercial enterprises. These investments are designed primarily to reduce market and development risks and to increase the number of lots we own or control. In some instances, participating in unconsolidated joint ventures has enabled us to acquire and develop land that we might not otherwise have had access to due to a project’s size, financing needs, duration of development or other circumstances. While we consider our participation in unconsolidated joint ventures as potentially beneficial to our homebuilding activities, we do not view such participation as essential. For distributions we receive from these unconsolidated joint ventures, we have elected to use the cumulative earnings approach for our consolidated statements of cash flows. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are treated as returns on investment within operating cash flows and those in excess of that amount are treated as returns of investment within investing cash flows. We typically have obtained rights to acquire portions of the land held by the unconsolidated joint ventures in which we currently participate. When an unconsolidated joint venture sells land to our homebuilding operations, we defer recognition of our share of such unconsolidated joint venture’s earnings (losses) until we recognize revenues on the corresponding home sale, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. At that time, we account for the earnings (losses) as a reduction (increase) to the cost of purchasing the land from the unconsolidated joint venture. We defer recognition of our share of such unconsolidated joint venture losses only to the extent profits are to be generated from the sale of the home to a homebuyer. We share in the earnings (losses) of these unconsolidated joint ventures generally in accordance with our respective equity interests. In some instances, we recognize earnings (losses) related to our investment in an unconsolidated joint venture that differ from our equity interest in the unconsolidated joint venture. This typically arises from our deferral of the unconsolidated joint venture’s earnings (losses) from land sales to us, or other items. We had investments in six unconsolidated joint ventures as of November 30, 2025 , 2024 and 2023 . The following table presents combined condensed information from the statements of operations for our homebuilding unconsolidated joint ventures (in thousands): 76 Years Ended November 30, 2025 2024 2023 Revenues $ 70,038 $ 65,866 $ 2,871 Construction and land costs ( 52,650 ) ( 48,627 ) ( 1,111 ) Other expenses, net ( 5,810 ) ( 5,033 ) ( 2,907 ) Income (loss) $ 11,578 $ 12,206 $ ( 1,147 ) The combined revenues and construction and land costs for November 30, 2025 and 2024 primarily related to homes delivered by an unconsolidated joint venture in California. In 2023 , our unconsolidated joint ventures did not deliver any homes. The following table presents combined condensed balance sheet information for our homebuilding unconsolidated joint ventures (in thousands): November 30, 2025 2024 Assets Cash $ 14,347 $ 18,869 Receivables 5,517 2,918 Inventories 155,015 158,322 Other assets 620 1,052 Total assets $ 175,499 $ 181,161 Liabilities and equity Accounts payable and other liabilities $ 10,063 $ 8,091 Notes payable (a) 40,216 47,300 Equity 125,220 125,770 Total liabilities and equity $ 175,499 $ 181,161 (a) As of both November 30, 2025 and 2024 , the unconsolidated joint venture in California that delivered homes in 2025 and 2024 had borrowings outstanding under a term loan with a third-party lender to finance its land acquisition, development and construction activities. In January 2025, the term loan was amended, increasing the aggregate commitment to $ 60.0 million from $ 55.0 million , and providing an eight -month loan extension option, which replaced two previous six - month extension options. Pursuant to the amendment, the aggregate commitment was reduced to $ 55.2 million on August 31, 2025, and is to be reduced to $ 40.0 million on February 28, 2026. This term loan is scheduled to mature on April 19, 2026 , unless extended or terminated pursuant to its applicable terms. If the term loan is extended, the aggregate commitment would be reduced to $ 28.0 million effective April 19, 2026. Borrowings under the term loan are secured by the underlying property and related project assets. None of our other unconsolidated joint ventures had outstanding debt at November 30, 2025 or 2024 . We provide certain guarantees and indemnities to the lender in connection with the above-described revolving line of credit, including a guaranty of interest and carry costs; a guaranty to complete the construction of phases of the improvements for the project as such phases are commenced; a guaranty against losses suffered due to certain bad acts or failures to act by the unconsolidated joint venture or its partners; and an indemnity from environmental issues. Except to the extent related to the foregoing guarantees and indemnities, we do not have a guaranty or any other obligation to repay borrowings under the line of credit or to support the value of the underlying collateral. However, various financial and non-financial covenants apply under the line of credit and with respect to the related guaranty and indemnity obligations, and a failure to comply with such covenants could result in a default and cause the lender to seek to enforce such guaranty and indemnity obligations. As of the date of this report, we were in compliance with the relevant covenants. We do not believe that our existing exposure under our guaranty and indemnity obligations related to outstanding borrowings under the line of credit is material to our consolidated financial statements. 77 Financial Services. The following table presents combined condensed information from the statements of operations for our financial services unconsolidated joint ventures, mostly comprised of KBHS ’s activities (in thousands): Years Ended November 30, 2025 2024 2023 Revenues $ 103,028 $ 129,516 $ 100,785 Expenses ( 69,449 ) ( 75,165 ) ( 69,390 ) Income $ 33,579 $ 54,351 $ 31,395 Revenues are primarily generat ed from fees earned on mortgage loan originations, interest earned for the period loans are held by KBHS , and gains on the sales of mortgage loans held for sale. Gains on the sales of mortgage loans held for sale include the realized and unrealized gains and losses associated with changes in the fair value of such loans and any related derivative financial instruments. The following table presents combined condensed balance sheet information for our financial services unconsolidated joint venture (in thousands): November 30, 2025 2024 Assets Cash and cash equivalents (a) $ 23,393 $ 31,702 Mortgage loans held for sale 177,068 122,828 Other assets 8,104 22,815 Total assets $ 208,565 $ 177,345 Liabilities and equity Accounts payable and other liabilities $ 13,394 $ 15,398 Funding facilities 168,709 117,953 Equity 26,462 43,994 Total liabilities and equity $ 208,565 $ 177,345 (a) Cash and cash equivalents includes restricted cash of $.9 million at November 30, 2025 and $ 1.3 million at November 30, 2024 . Mortgage loans held for sale . Originated mortgage loans expected to be sold into the secondary market in the foreseeable future are reported as mortgage loans held for sale and carried in KBHS ’ balance sheets at fair value, with changes in fair value recognized within revenues in KBHS ’ statements of operations. Interest rate lock commitments . KBHS enters into IRLCs in connection with originating certain mortgage loans held for sale, at specified interest rates and within a specified period of time, with customers who have applied for a mortgage loan and meet certain credit and underwriting criteria. KBHS accounts for IRLCs as free-standing derivatives and does not designate any for hedge accounting. As a result, IRLCs are recognized in KBHS ’ balance sheets at fair value, and gains or losses resulting from changes in fair value are recognized within revenues in KBHS ’ statements of operations. The fair value of IRLCs is based on market prices, which includes an estimate of the fair value of the associated mortgage servicing rights, adjusted for estimated costs to originate the underlying mortgage loans, as well as the probability that the mortgage loans will fund within the terms of the IRLCs . The fair value of IRLCs included in other assets in KBHS ’ balance sheets was $ 4.6 million at November 30, 2025 and $ 16.0 million at November 30, 2024 . The changes in the fair value of IRLCs , which were reported in revenues for the applicable periods, were losses of $ 11.4 million for 2025 and $ 16.0 million for 2023 and a gain of $ 2.1 million for 2024 . KBHS manages the interest rate and price risk associated w ith its outstanding IRLCs by entering into best efforts forward sale commitments under which mortgage loans locked with a borrower are simultaneously committed to a secondary market investor at a fixed price, subject to the underlying mortgage loans being funded. These best efforts forward sale commitments do not meet the definition of derivative financial instruments and are therefore not recorded in KBHS ’ balance sheets. If the mortgage loans underlying the IRLCs do not fund, KBHS ha s no obligation to fulfill the secondary market investor commitments. 78 Funding facilities . KBHS maintains warehouse lines of credit and master repurchase agreements with various financial institutions to fund its originated mortgage loans, with its mortgage loans held for sale pledged as collateral under these agreements. The agreements contain covenants which include certain financial requirements, including maintenance of minimum tangible net worth, minimum liquid assets, maximum debt to net worth ratio and positive net income, as defined in the agreements. KBHS was in compliance with these covenants as of November 30, 2025 . In addition to its compliance with these covenants, KBHS also depends on the ability and willingness of the applicable lenders and financial institutions, including any substitute or additional lenders and financial institutions, to extend such credit facilities to KBHS to fund its originated mortgage loans. KBHS intends to renew these facilities when they expire at various dates in 2026. The warehouse lines of credit and master repurchase agreements are not guaranteed by us or any of our Guarantor Subsidiaries. Note 10. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): November 30, 2025 2024 Computer software and equipment $ 61,627 $ 54,875 Model furnishings and sales office improvements 120,357 102,907 Leasehold improvements, office furniture and equipment 23,019 22,280 Subtotal 205,003 180,062 Accumulated depreciation ( 103,546 ) ( 89,703 ) Total $ 101,457 $ 90,359 Note 11 . Other Assets Other assets consisted of the following (in thousands): November 30, 2025 2024 Cash surrender value of corporate-owned life insurance contracts $ 51,182 $ 51,912 Lease right-of-use assets 17,494 18,704 Prepaid expenses 14,982 17,799 Other (a) 24,175 17,505 Total $ 107,833 $ 105,920 (a) Other includes investments in equity securities without readily determinable fair values, totaling $ 15.2 million at November 30, 2025 and 2024 . We received these securities in connection with the March 1, 2024 sale of substantially all the assets of an investee company, in which we had an aggregate ownership interest of approximately 13.5 % , to a privately held buyer through a merger. From the sale, we received cash plus certain preferred and common equity interests in the buyer. In connection with the sale, we recognized a gain of $ 12.5 million , which was included in interest income and other in our consolidated statements of operations for the year ended November 30, 2024 . 79 Note 12. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): November 30, 2025 2024 Self-insurance and other legal liabilities $ 290,107 $ 315,851 Employee compensation and related benefits 157,170 182,460 Warranty liability 101,245 96,026 Inventory-related obligations (a) 48,243 44,408 Accrued interest payable 29,219 28,806 Customer deposits 28,033 44,029 Lease liabilities 19,775 20,859 Real estate and business taxes 13,612 17,056 Other 44,542 46,766 Total $ 731,946 $ 796,261 (a) Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities , as well as liabilities for fixed or determinable amounts associated with TIFE assessments. As homes are delivered, our obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes on applicable lots before the related TIFE obligations mature. Note 13 . Leases We lease certain property and equipment for use in our operations. We recognize lease expense for these leases generally on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Lease right-of-use assets and lease liabilities are recorded in our consolidated balance sheets for leases with an expected term at the commencement date of more than 12 months. Some of our leases include one or more renewal options, the exercise of which is generally at our discretion. Such options are excluded from the expected term of the lease unless we determine it is reasonably certain the option will be exercised. Lease liabilities are equal to the present value of the remaining lease payments while the amount of lease right-of-use assets is based on the lease liabilities, subject to adjustment, such as for lease incentives. Our leases do not provide a readily determinable implicit interest rate; therefore, we estimate our incremental borrowing rate to calculate the present value of remaining lease payments. In determining our incremental borrowing rate, we considered the lease term, market interest rates, current interest rates on our senior notes and the effects of collateralization. Our lease population at November 30, 2025 was comprised of operating leases where we are the lessee, primarily real estate leases for our corporate offices, division offices and design studios, as well as certain equipment leases. Our lease agreements do not contain any residual value guarantees or material restrictive covenants. Lease expense is included in selling, general and administrative expenses in our consolidated statements of operations and includes costs for leases with terms of more than 12 months as well as short-term leases with terms of 12 months or less. For the years ended November 30, 2025 , 2024 and 2023 , our total lease expense was $ 20.5 million , $ 20.2 million and $ 22.1 million , respectively, and included short-term lease costs of $ 7.2 million , $ 7.0 million and $ 8.6 million , respectively. Variable lease costs and external sublease income for the years ended November 30, 2025 , 2024 and 2023 were immaterial. The following table presents our lease right-of-use assets, lease liabilities and the weighted-average remaining lease term and weighted-average discount rate (incremental borrowing rate) used in calculating the lease liabilities (dollars in thousands): November 30, 2025 2024 Lease right-of-use assets (a) $ 17,519 $ 18,734 Lease liabilities (a) 19,801 20,887 Weighted-average remaining lease term 2.9 years 2.8 years Weighted-average discount rate (incremental borrowing rate) 4.5 % 4.6 % 80 (a) Lease right-of-use assets and lease liabilities are predominantly within our homebuilding operations, with only nominal amounts in our financial services operations. The following table presents additional information about our leases (in thousands): Years Ended November 30, 2025 2024 Lease right-of-use assets obtained in exchange for new lease liabilities $ 7,968 $ 4,780 Cash payments on lease liabilities 12,459 12,594 As of November 30, 2025 , the future minimum lease payments required under our leases are as follows (in thousands): Years Ending November 30, 2026 $ 7,935 2027 7,001 2028 4,077 2029 1,586 2030 592 Thereafter — Total lease payments 21,191 Less: Interest ( 1,390 ) Present value of lease liabilities $ 19,801 Note 14 . Income Taxe s Income Tax Expense. The components of the income tax expense in our consolidated statements of operations are as follows (in thousands): Federal State Total 2025 Current $ ( 90,600 ) $ ( 21,100 ) $ ( 111,700 ) Deferred ( 8,600 ) ( 5,100 ) ( 13,700 ) Income tax expense $ ( 99,200 ) $ ( 26,200 ) $ ( 125,400 ) 2024 Current $ ( 147,300 ) $ ( 31,500 ) $ ( 178,800 ) Deferred ( 3,100 ) ( 14,000 ) ( 17,100 ) Income tax expense $ ( 150,400 ) $ ( 45,500 ) $ ( 195,900 ) 2023 Current $ ( 123,200 ) $ ( 17,200 ) $ ( 140,400 ) Deferred ( 8,400 ) ( 32,300 ) ( 40,700 ) Income tax expense $ ( 131,600 ) $ ( 49,500 ) $ ( 181,100 ) Our effective tax rates were 22.6 % for 2025 , 23.0 % for 2024 and 23.5 % for 2023 . In 2025 , our income tax expense and effective tax rate included the favorable impacts of $ 13.1 million of Section 45L tax credits we recognized primarily from building energy-efficient homes and $ 8.2 million of excess tax benefits related to stock- based compensation, partly offset by $ 12.9 million of non-deductible executive compensation expense. In 2024 , our income tax expense and effective tax rate reflected the favorable impacts of $ 19.3 million of Section 45L tax credits and $ 7.9 million of excess tax benefits related to stock-based compensation, partly offset by $ 10.7 million of non-deductible executive compensation expense. In 2023 , our income tax expense and effective tax rate reflected the favorable impacts of $ 25.2 million 81 of Section 45L tax credits and $ 5.5 million of excess tax benefits related to stock-based compensation, partly offset by $ 12.2 million of non-deductible executive compensation expense. In 2025, Section 45L tax credits decreased year over year, largely reflecting the impact of guidance the IRS issued in 2023 that heightened the Section 45L energy-efficiency qualification standard for homes built in California relative to other states and our decision to build homes in many of our markets beginning in 2025 that are highly energy efficient and qualify for ENERGY STAR certification but do not qualify for Section 45L tax credits. We believe the additional costs necessary to satisfy the higher standards for some of our homes outweigh the possible benefits of meeting those higher standards for both our business and our buyers. On July 4, 2025, the OBBBA was signed into law. Among its provisions is the repeal of Section 45L tax credits for new energy-efficient homes delivered after June 30, 2026. As a result, beginning in our 2026 third quarter, our income tax expense and effective tax rate will no longer reflect a benefit from such tax credits as to homes delivered after the effective date. The other tax-related provisions of the OBBBA are not expected to have a material impact on our consolidated financial statements. Deferred Tax Assets, Net. Deferred income taxes result from temporary differences in the financial and tax basis of assets and liabilities. Significant components of our deferred tax liabilities and assets are as follows (in thousands): November 30, 2025 2024 Deferred tax liabilities: Capitalized expenses $ 27,463 $ 26,792 State taxes 7,860 9,680 Depreciation and amortization 5,169 8,055 Other 313 308 Total 40,805 44,835 Deferred tax assets: Warranty, legal and other accruals 49,322 50,360 Employee benefits 47,482 53,282 NOLs from 2006 through 2025 20,280 21,811 Capitalized expenses 18,839 21,861 Inventory impairment and land option contract abandonment charges 5,261 7,653 Partnerships and joint ventures 2,189 5,879 Tax credits 410 2,019 Other 1,187 1,191 Total 144,970 164,056 Valuation allowance ( 15,500 ) ( 16,800 ) Total 129,470 147,256 Deferred tax assets, net $ 88,665 $ 102,421 Reconciliation of Expected Income Tax Expense. The income tax expense computed at the statutory U.S. federal income tax rate and the income tax expense provided in our consolidated statements of operations differ as follows (dollars in thousands): 82 Years Ended November 30, 2025 2024 2023 $ % $ % $ % Income tax expense computed at statutory rate $ ( 116,380 ) ( 21.0 ) % $ ( 178,692 ) ( 21.0 ) % $ ( 161,982 ) ( 21.0 ) % Tax credits 14,726 2.7 19,321 2.3 25,218 3.3 Stock compensation 6,719 1.2 6,405 .7 4,471 .6 Valuation allowance for deferred tax assets 1,300 .2 100 — 200 — Non-deductible compensation ( 10,527 ) ( 1.9 ) ( 8,703 ) ( 1.0 ) ( 9,975 ) ( 1.3 ) State taxes, net of federal income tax benefit ( 21,755 ) ( 3.9 ) ( 36,028 ) ( 4.2 ) ( 39,307 ) ( 5.1 ) Other, net 517 .1 1,697 .2 275 — Income tax expense $ ( 125,400 ) ( 22.6 ) % $ ( 195,900 ) ( 23.0 ) % $ ( 181,100 ) ( 23.5 ) % Deferred Tax Asset Valuation Allowance. We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. In our evaluation, we give more significant weight to evidence that is objective in nature as compared to subjective evidence. Also, more significant weight is given to evidence that directly relates to our then-current financial performance as compared to indirect or less current evidence. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of our deferred tax assets depends on applicable income tax rates. Our deferred tax assets of $ 104.2 million at November 30, 2025 and $ 119.2 million at November 30, 2024 were partially offset in each year by valuation allowances of $ 15.5 million and $ 16.8 million , respectively. The deferred tax asset valuation allowances at November 30, 2025 and 2024 were primarily related to certain state NOL s that had not met the “more likely than not” realization standard at those dates. As a result of changes in state income tax rates and our utilization of certain state NOL s, we reduced the valuation allowance by $ 1.3 million in 2025 . As of November 30, 2025 , we would need to generate approximately $ 356.0 million of pretax income within certain states in future periods before 2044 to realize our deferred tax assets. Based on the evaluation of our deferred tax assets as of November 30, 2025 and 2024 , we determined that most of our deferred tax assets would be realized. We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. The accounting for deferred tax assets is based upon estimates of future results. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing federal and state tax laws and corporate income tax rates could also affect actual tax results and the realization of deferred tax assets over time. The majority of the tax benefits associated with our NOL s can be carried forward for 20 years and applied to offset future taxable income. Depending on their applicable statutory period, the state NOL s of $ 20.3 million , if not utilized, will begin to expire between 2026 and 2044 . In 2025, $.1 million of state NOLs expired. No state NOL s expired in 2024 or 2023. Unrecognized Tax Benefits. Gross unrecognized tax benefits are the differences between a tax position taken or expected to be taken in a tax return, and the benefit recognized for accounting purposes. A reconciliation of the beginning and ending balances of gross unrecognized tax benefits, including interest and penalties, is as follows (in thousands): Years Ended November 30, 2025 2024 2023 Balance at beginning of year $ 2,922 $ 2,376 $ 975 Increase (decrease) related to prior years’ tax positions ( 1,491 ) 546 1,401 Balance at end of year $ 1,431 $ 2,922 $ 2,376 83 Our unrecognized tax benefits are included in accrued expenses and other liabilities in our consolidated balance sheets. We recognize accrued interest and penalties related to unrecognized tax benefits in our consolidated financial statements as a component of the provision for income taxes. If these unrecognized tax benefits reverse in the future, they would have a beneficial impact on our effective tax rate at that time. During the next 12 months, it is possible that the amount of unrecognized tax benefits will change, but we are not able to provide a range of such change. The potential change, if any, will be related to increases due to new tax positions taken and the accrual of interest and penalties. Our total accrued interest and penalties related to unrecognized income tax benefits was approximately $.2 million at November 30, 2025 and 2024 . Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect our annual effective tax rate but would accelerate the payment of cash to a tax authority to an earlier period. As of November 30, 2025, the fiscal years ending 2022 and later remain open to federal examinations, while 2021 and later remain open to state examinations. The benefits of our deferred tax assets, including our NOL s, built-in losses and tax credits would be reduced or potentially eliminated if we experienced an “ownership change” under Internal Revenue Code Section 382 (“Section 382”). Based on our analysis performed as of November 30, 2025 , we do not believe that we have experienced an ownership change as defined by Section 382, and, therefore, the NOL s, built-in losses and tax credits we have generated should not be subject to a Section 382 limitation as of this reporting date. Note 15 . Notes Payable Notes payable consisted of the following (in thousands): November 30, 2025 2024 Senior unsecured term loan due November 12, 2029 $ 358,317 $ 358,826 6.875 % Senior notes due June 15, 2027 299,096 298,560 4.80 % Senior notes due November 15, 2029 298,309 297,932 7.25 % Senior notes due July 15, 2030 347,084 346,574 4.00 % Senior notes due June 15, 2031 387,095 386,638 Mortgages and land contracts due to land sellers and other loans (at an interest rate of 4.3 % at November 30, 2025 and 2024) 3,076 3,149 Total $ 1,692,977 $ 1,691,679 The carrying amounts of the Term Loan and senior notes listed above are net of debt issuance costs, which totaled $ 10.1 million at November 30, 2025 and $ 11.5 million at November 30, 2024 . Unsecured Revolving Credit Facility. On November 12, 2025 , we obtained a $ 1.20 billion Credit Facility , which refinanced and replaced our prior $ 1.09 billion unsecured revolving credit facility that was due to mature on February 18, 2027 . The Credit Facility will mature on November 12, 2030 and contains an uncommitted accordion feature under which its aggregate principal amount of available loans can be increased to a maximum of $ 1.70 billion under certain conditions, including obtaining additional bank commitments. The Credit Facility also contains a sublimit of $ 250.0 million for the issuance of letters of credit. Interest on amounts borrowed under the Credit Facility accrues at a term SOFR, daily SOFR or a base rate, plus a spread that depends on our Leverage Ratio , as defined under the Credit Facility . Interest is payable monthly (base rate or daily SOFR borrowings) or each month or three months (term SOFR borrowings). The Credit Facility also requires the payment of a commitment fee at a per annum rate ranging from .15 % to .35 % of the unused commitment, based on our Leverage Ratio . Under the terms of the Credit Facility , we are required, among other things, to maintain compliance with various covenants, including financial covenants relating to our consolidated tangible net worth, Leverage Ratio , and either an Interest Coverage Ratio or a minimum level of liquidity, each as defined therein. Our obligations to pay borrowings under the Credit Facility are guaranteed on a joint and several basis by our Guarantor Subsidiaries. The amount of the Credit Facility available for cash borrowings and the issuance of letters of credit depends on the total cash borrowings and letters of credit outstanding under the Credit Facility and the maximum available amount under the terms of the Credit Facility . As of November 30, 2025 , we had no cash borrowings and $ 1.6 million of letters of credit outstanding under the Credit Facility . Therefore, as of November 30, 2025 , we had nearly $ 1.20 billion available for cash borrowings under the Credit Facility , with up to $ 248.4 million of that amount available for the issuance of letters of credit. Senior Unsecured Term Loan. On November 12, 2025, we also entered into an amendment to our Term Loan with the lenders party thereto that extended its maturity from August 25, 2026 to November 12, 2029 . Interest under the Term Loan 84 accrues at a term SOFR , daily SOFR or base rate, plus a spread that depends on our Leverage Ratio . Interest is payable quarterly (base rate borrowing), monthly (daily SOFR loans), or each month or three months (term SOFR borrowing). The Term Loan contains various covenants that are substantially the same as those under the Credit Facility . The proceeds drawn under the Term Loan are guaranteed on a joint and several basis by our Guarantor Subsidiaries. As of November 30, 2025 and 2024 , the weighted average annual interest rates on our outstanding borrowings under the Term Loan were 5.4 % and 6.0 % , respectively. LOC Facility. We maintain a LOC Facility to obtain letters of credit from time to time in the ordinary course of operating our business. Under the LOC Facility , which expires on February 13, 2028 , we may issue up to $ 100.0 million of letters of credit. As of November 30, 2025 and 2024 , we had letters of credit outstanding under the LOC Facility of $ 68.2 million and $ 73.3 million , respectively. Senior Notes. All the senior notes outstanding at November 30, 2025 and 2024 represent senior unsecured obligations that are guaranteed by certain of our subsidiaries and rank equally in right of payment with all of our and our Guarantor Subsidiaries’ existing unsecured and unsubordinated indebtedness. All of our senior notes were issued in underwritten public offerings. Interest on each of these senior notes is payable semi-annually. The key terms of each of our senior notes outstanding as of November 30, 2025 were as follows (dollars in thousands): Redeemable Prior to Maturity Effective Interest Rate Notes Payable Principal Issuance Date Maturity Date 6.875 % Senior notes $ 300,000 February 20, 2019 June 15, 2027 Yes (a) 7.1 % 4.80 % Senior notes 300,000 November 4, 2019 November 15, 2029 Yes (a) 5.0 7.25 % Senior notes 350,000 June 22, 2022 July 15, 2030 Yes (b) 7.5 4.00 % Senior notes 390,000 June 9, 2021 June 15, 2031 Yes (a) 4.2 (a) At our option, these notes may be redeemed, in whole at any time or from time to time in part, at a redemption price equal to the greater of (i) 100 % of the principal amount of the notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed (exclusive of interest accrued to the applicable redemption date), discounted to the redemption date at a defined rate, plus, in each case, accrued and unpaid interest on the notes being redeemed to, but excluding, the applicable redemption date, except that six months prior to the stated maturity date for these notes, the redemption price will be equal to 100 % of the principal amount of the notes being redeemed, plus accrued and unpaid interest on the notes being redeemed to, but excluding, the applicable redemption date. (b) At our option, these notes may be redeemed, in whole at any time or in part from time to time, on or after July 15, 2025, at the applicable specified redemption price, including accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Depending on the redemption date, the applicable redemption price ranges from 100 % to 103.625 % of the principal amount of the notes to be redeemed. If a change in control occurs as defined in the instruments governing our senior notes, we would be required to offer to purchase all of our outstanding senior notes at 101 % of their principal amount, together with all accrued and unpaid interest, if any. The indenture governing our senior notes does not contain any financial covenants. Subject to specified exceptions, the indenture contains certain restrictive covenants that, among other things, limit our ability to incur secured indebtedness, or engage in sale-leaseback transactions involving property above a certain specified value. In addition, the indenture contains certain limitations related to mergers, consolidations, and sales of assets. As of the date of this report, we were in compliance with the applicable terms of all our covenants and other requirements under the Credit Facility, the Term Loan, the senior notes, the indenture, the LOC Facility, and the mortgages and land contracts due to land sellers and other loans. Our ability to access the Credit Facility for cash borrowings and letters of credit and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance. Our ability to access the Credit Facility’s full borrowing capacity, as well as the LOC Facility’s full issuance capacity, also depends on the ability and willingness of the applicable lenders and financial institutions, including any substitute or additional lenders and financial institutions, to meet their commitments to fund loans, extend credit or provide payment guarantees to or for us under those instruments. There are no agreements that restrict our payment of dividends other than the Credit Facility and the Term Loan , which would restrict our payment of certain dividends, such as cash dividends on our common stock, if a default under the Credit Facility or the Term Loan exists at the time of any such payment, or if any such payment would result in such a default (other than dividends paid within 60 days after declaration, if there was no default at the time of declaration). 85 Mortgages and Land Contracts Due to Land Sellers and Other Loans. As of November 30, 2025 , inventories having a carrying value of $ 16.8 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans. Shelf Registration. Our 2023 Shelf Registration is filed with the SEC . The 2023 Shelf Registration registers the offering of securities that we may issue from time to time in amounts to be determined. Our ability to issue securities is subject to market conditions and, with respect to debt securities, other factors impacting our borrowing capacity. We have not made any offerings of securities under the 2023 Shelf Registration . Principal payments on our notes payable are due during each year ending November 30 as follows: 2026 — $.8 million ; 2027 — $ 301.0 million ; 2028 — $.8 million ; 2029 — $ 660.4 million ; 2030 — $ 350.0 million ; and thereafter — $ 390.0 million . Note 16. Fair Value Disclosures Fair value measurements of assets and liabilities are categorized based on the following hierarchy: Level 1 Fair value determined based on quoted prices in active markets for identical assets or liabilities. Level 2 Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means. Level 3 Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques. Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. These measurements are generally Level 3 within the fair value hierarchy. See Note 7 – Inventory Impairments and Land Option Contract Abandonments for information regarding the valuation of these assets. November 30, 2025 November 30, 2024 Description Fair Value Hierarchy Pre- Impairment Value Inventory Impairment Charges Fair Value (a) Pre- Impairment Value Inventory Impairment Charges Fair Value (a) Inventories Level 3 $ 54,095 $ ( 15,531 ) $ 38,564 $ — $ — $ — (a) Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period, as of the date that the fair value measurements were made. The carrying value for these real estate assets may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date. The following table presents the fair value hierarchy, carrying values and estimated fair values of our financial instruments, except those for which the carrying values approximate fair values (in thousands): November 30, 2025 2024 Description Fair Value Hierarchy Carrying Value (a) Estimated Fair Value Carrying Value (a) Estimated Fair Value Financial Liabilities: Senior notes Level 2 $ 1,331,584 $ 1,333,188 $ 1,329,704 $ 1,309,700 (a) The carrying value for the senior notes, as presented, includes unamortized debt issuance costs. Debt issuance costs are not factored into the estimated fair values of these notes . The fair values of our senior notes are generally estimated based on quoted market prices for these instruments. The carrying values reported for cash and cash equivalents, outstanding borrowings under the Credit Facility , if any, and the Term Loan , and mortgages and land contracts due to land sellers and other loans approximate fair values. The carrying value of corporate-owned life insurance is based on the cash surrender value of the policies and, accordingly, approximates fair value. 86 Note 17 . Commitments and Contingencies Commitments and contingencies include typical obligations of homebuilders for the completion of contracts and those incurred in the ordinary course of business. Warranty. We provide a limited warranty on all of our homes. The specific terms and conditions of our limited warranty program vary depending upon the markets in which we do business. We generally provide a structural warranty of 10 years , a warranty on electrical, heating, cooling, plumbing and certain other building systems each varying from two to five years based on geographic market and state law, and a warranty of one year for other components of the home. Our limited warranty program is ordinarily how we respond to and account for homeowners’ requests to local division offices seeking repairs of certain conditions or defects, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a home. Our warranty liability covers our costs of repairs associated with homeowner claims made under our limited warranty program. These claims are generally made directly by a homeowner and involve their individual home. We periodically assess the adequacy of our accrued warranty liability, which is included in accrued expenses and other liabilities in our consolidated balance sheets, and adjust the amount as necessary based on our assessment. Our assessment includes the review of our actual warranty costs incurred to identify trends and changes in our warranty claims experience, and considers our home construction quality and customer service initiatives and outside events. While we believe the warranty liability currently reflected in our consolidated balance sheets to be adequate, unanticipated changes or developments in the legal environment, local weather, land or environmental conditions, quality of materials or methods used in the construction of homes or customer service practices and/or our warranty claims experience could have a significant impact on our actual warranty costs in future periods and such amounts could differ significantly from our current estimates. The changes in our warranty liability were as follows (in thousands): Years Ended November 30, 2025 2024 2023 Balance at beginning of year $ 96,026 $ 98,000 $ 101,890 Warranties issued 40,963 40,630 37,424 Payments ( 35,744 ) ( 42,604 ) ( 45,314 ) Adjustments — — 4,000 Balance at end of year $ 101,245 $ 96,026 $ 98,000 Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales. Based on historical experience, we do not believe any potential liability with respect to these representations, warranties or guarantees would be material to our consolidated financial statements. Self-Insurance. W e maintain, and require the majority of our independent contractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our homebuilding activities, subject to certain self- insured retentions, deductibles and other coverage limits . We also maintain certain other insurance policies. Costs associated with our self-insurance programs are included in selling, general and administrative expenses. In Arizona, California, Colorado and Nevada, our contractors’ general liability insurance primarily takes the form of a wrap-up policy under a program where eligible independent contractors are enrolled as insureds on each community. Enrolled contractors generally contribute toward the cost of the insurance and agree to pay a contractual amount in the future if there is a claim related to their work. To the extent provided under the wrap-up program, we absorb the enrolled contractors’ general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self- insurance. We self-insure a portion of our overall risk through the use of a captive insurance subsidiary, which provides coverage for our exposure to construction defect, bodily injury and property damage claims and related litigation or regulatory actions, up to certain limits. Our self-insurance liability generally covers the costs of settlements and/or repairs, if any, as well as our costs to defend and resolve the following types of claims: • Construction defect : Construction defect claims, which represent the largest component of our self-insurance liability, typically originate through a legal or regulatory process rather than directly by a homeowner and involve the alleged occurrence of a condition affecting two or more homes within the same community, or they involve a common area or 87 homeowners’ association property within a community. These claims typically involve higher costs to resolve than individual homeowner warranty claims, and the rate of claims is highly variable. • Bodily injury : Bodily injury claims typically involve individuals (other than our employees) who claim they were injured while on our property or as a result of our operations. • Property damage : Property damage claims generally involve claims by third parties for alleged damage to real or personal property as a result of our operations. Such claims may occasionally include those made against us by owners of property located near our communities. As of November 30, 2025 and 2024, our self-insurance liability was primarily related to construction defect claims. Our self-insurance liability at each reporting date represents the estimated costs of reported claims, claims incurred but not yet reported, and claim adjustment expenses. The amount of our self-insurance liability is based on an analysis performed by a third-party actuary that uses our historical claim and expense data, as well as industry data to estimate these overall costs. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. In addition, changes in the frequency and severity of reported claims and the estimates to resolve claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Though state regulations vary, construction defect claims are reported and resolved over a long period of time, which can extend for 10 years or more. As a result, the majority of the estimated self-insurance liability based on the actuarial analysis relates to claims incurred but not yet reported. Therefore, adjustments related to individual existing claims generally do not significantly impact the overall estimated liability. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs. Our self-insurance liability is presented on a gross basis for all years without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any . Estimated probable insurance and other recoveries of $ 22.3 million and $ 22.6 million are included in receivables in our consolidated balance sheets at November 30, 2025 and 2024 , respectively. These self-insurance recoveries are principally based on actuarially determined amounts and depend on various factors, including, among other things, the above-described claim cost estimates, our insurance policy coverage limits for the applicable policy year(s), historical third-party recovery rates, insurance industry practices, the regulatory environment and legal precedent, and are subject to a high degree of variability from year to year. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated. The changes in our self-insurance liability were as follows (in thousands): Years Ended November 30, 2025 2024 2023 Balance at beginning of year $ 185,428 $ 179,832 $ 175,977 Self-insurance provided 20,379 21,663 18,351 Payments ( 28,766 ) ( 16,008 ) ( 20,896 ) Adjustments (a) 2,206 ( 59 ) 6,400 Balance at end of year $ 179,247 $ 185,428 $ 179,832 (a) Represents net changes in the portion of our self-insurance liability estimated to be recoverable from our insurers or other parties, and/or actual recoveries funded directly by our insurers or other parties, if any , and an adjustment to increase our previously recorded liability by $ 5.5 million in 2024 and $ 6.5 million in 2023 . For most of our claims, there is no interaction between our warranty liability and self-insurance liability. Typically, if a matter is identified at its outset as either a warranty or self-insurance claim, it remains as such through its resolution. However, there can be instances of interaction between the liabilities, such as where individual homeowners in a community separately request warranty repairs to their homes to address a similar condition or issue and subsequently join together to initiate, or potentially initiate, a legal process with respect to that condition or issue and/or the repair work we have undertaken. In these instances, the claims and related repair work generally are initially covered by our warranty liability, and the costs associated with resolving the legal matter (including any additional repair work) are covered by our self-insurance liability. 88 The payments we make in connection with claims and related repair work may be recovered from our insurers to the extent such payments exceed the self-insured retentions or deductibles under, and are within the scope of coverage provided by, our general liability insurance policies. Also, in certain instances, in the course of resolving a claim, we pay amounts in advance of and/or on behalf of an independent contractor(s) or their insurer(s) and believe we will be reimbursed for such payments. Estimates of all such amounts, if any, are recorded as receivables in our consolidated balance sheets when any such recovery is considered probable. In addition to the risk that is effectively self-insured through our captive insurance subsidiary, we often obtain project- specific insurance coverage for construction defect risk on attached projects ( e.g. , condominiums or townhomes) with self- insured retentions generally ranging from $ 50,000 to $ 250,000 . We record estimated liabilities and recoveries for projected losses related to these projects on a gross basis, including for known claims as well as estimates for claims incurred but not yet reported, to the extent such amounts are considered probable and estimable. Pe r formance Bonds and Letters of Credit. We are often required to provide to various municipalities and other government agencies performance bonds and/or letters of credit to secure the completion of our projects and/or in support of obligations to build community improvements such as roads, sewers, water systems and other utilities, and to support similar development activities by certain of our unconsolidated joint ventures. At November 30, 2025 , we had $ 1.37 billion of performance bonds and $ 69.8 million of letters of credit outstanding. At November 30, 2024 , we had $ 1.33 billion of performance bonds and $ 81.6 million of letters of credit outstanding. If any such performance bonds or letters of credit are called, we would be obligated to reimburse the issuer of the performance bond or letter of credit. We do not believe that a material amount of any currently outstanding performance bonds or letters of credit will be called. Performance bonds do not have stated expiration dates. Rather, we are released from the performance bonds as the underlying performance is completed. The expiration dates of some letters of credit issued in connection with community improvements coincide with the expected completion dates of the related projects or obligations. Most letters of credit, however, are issued with an initial term of one year and are typically extended on a year-to-year basis until the related performance obligations are completed. Land Option Contracts and Other Similar Contracts. In the ordinary course of business, we enter into land option contracts and other similar contracts to acquire rights to land for the construction of homes. At November 30, 2025 , we had total cash deposits of $ 80.9 million to purchase land having an aggregate purchase price of $ 2.06 billion . Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance. Civil Subpoena . On October 2, 2023, we received a subpoena from the U.S. Department of Justice Civil Division, dated September 27, 2023, to produce certain documents and testimony with respect to the inspection, rating, marketing and advertising of our ENERGY STAR homes, including our contracts and/or communications with U.S. EPA and third-party ENERGY STAR rating companies, real estate brokers, real estate appraisers, financial institutions and other parties, as well as inspection-related guidelines, instructions, methods, policies, processes and procedures. We are cooperating with the government, producing documents and information. As of the date of this report, we are unable to predict what actions the government will take, if any; the timing or nature of the ultimate outcome in this matter; or the impact, if any, such outcome may have on our business or consolidated financial statements. As a result, while a loss or penalty, if any, is reasonably possible in this matter, it is not considered to be probable or estimable . Note 18 . Legal Matters We are involved in litigation and regulatory proceedings incidental to our business that are in various procedural stages. We believe the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of November 30, 2025 , it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized or disclosed in our consolidated financial statements. We evaluate our accruals for litigation and regulatory proceedings at least quarterly and, as appropriate, adjust them to reflect (a) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments; (b) the advice and analyses of counsel; and (c) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. Our accruals for litigation and regulatory proceedings are presented on a gross basis without consideration of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimates of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable. Based on our experience, we believe the amounts that may be claimed or alleged against us in these proceedings are not a meaningful indicator of our potential liability. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if an accrual has not been made, could be material to our consolidated financial statements. Pursuant to SEC rules, we will 89 disclose any proceeding in which a governmental authority is a party and that arises under any federal, state or local provisions enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment only where we believe that such proceeding will result in monetary sanctions on us, exclusive of interest and costs, above $1.0 million or is otherwise material to our consolidated financial statements. Note 19 . Stockholders’ Equity Preferred Stock. Prior to its April 30, 2024 expiration, we had in place a stockholder-approved rights agreement, and each share of our common stock included a related preferred share purchase right, to help protect the benefits of our NOL s and other deferred tax assets from an ownership change under Section 382. With the expiration of the rights agreement, which was initially established in 2009, we de-listed and de-registered the related rights in August 2024. Additionally, per its authority thereunder, our board of directors fixed October 10, 2024 as the expiration date for Article Ninth of our Restated Certificate of Incorporation, as amended, which was also put in place in 2009 as a supplemental mechanism to help protect such NOL -related benefits. Common Stock. In the 2023 first quarter, we repurchased 1,965,442 shares of our common stock on the open market pursuant to a 2022 board of directors authorization at a total cost of $ 75.0 million . On March 21, 2023, our board of directors authorized us to repurchase up to $ 500.0 million of our outstanding common stock. This authorization replaced the 2022 authorization. In the 2023 second, third and fourth quarters, we repurchased 7,278,995 shares of our common stock on the open market pursuant to the 2023 authorization at a total cost of $ 336.4 million , bringing our total repurchases for the year ended November 30, 2023 to 9,244,437 shares of common stock at a total cost of $ 411.4 million . As of November 30, 2023, there was $ 163.6 million of remaining availability under this share repurchase authorization. In the 2024 first quarter, we repurchased 826,663 shares of our common stock on the open market pursuant to the 2023 board of directors authorization at a total cost of $ 50.0 million . On April 18, 2024, our board of directors authorized us to repurchase up to $ 1.00 billion of our outstanding common stock. This authorization replaced the 2023 authorization, which had $ 113.6 million remaining. In the 2024 second, third and fourth quarters, we repurchased 3,898,518 shares of our common stock on the open market pursuant to the 2024 authorization at a total cost of $ 300.0 million , bringing our total repurchases for the year ended November 30, 2024 to 4,725,181 shares of common stock at a total cost of $ 350.0 million . As of November 30, 2024 , there was $ 700.0 million of remaining availability under the 2024 share repurchase authorization. In the 2025 first, second and third quarters, we repurchased 7,788,113 shares of our common stock on the open market pursuant to the 2024 board of directors authorization at a total cost of $ 438.5 million . On October 9, 2025, our board of directors authorized us to repurchase up to $ 1.00 billion of our outstanding common stock. This authorization replaced the 2024 authorization, which had $ 261.5 million remaining. In the 2025 fourth quarter, we repurchased 1,597,196 shares of our common stock on the open market pursuant to the 2025 authorization at a total cost of $ 100.0 million , bringing our total repurchases for the year ended November 30, 2025 to 9,385,309 shares of common stock at a total cost of $ 538.5 million . Repurchases under the current authorization may occur periodically through open market purchases, privately negotiated transactions or otherwise, with the timing and amount at management’s discretion and dependent on market, business and other conditions. This share repurchase authorization will continue in effect until fully used or earlier terminated or suspended by our board of directors, and does not obligate us to purchase any shares. As of November 30, 2025 , there was $ 900.0 million of remaining availability under the 2025 share repurchase authorization. The IRA imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. All dollar amounts presented in this report related to our share repurchases and our share repurchase authorizations exclude such excise taxes, to the extent applicable, unless otherwise indicated. In 2025 , our board of directors declared four quarterly cash dividends of $ .25 per share of common stock. In the 2024 first quarter, our board of directors declared a quarterly cash dividend of $ .20 per share of common stock. Our board of directors approved a $ .05 per share increase in the quarterly cash dividend on our common stock to $ .25 per share in the 2024 second quarter, and declared quarterly dividends at the new higher rate for the 2024 second, third and fourth quarters. In the 2023 first and second quarters , our board of directors declared quarterly cash dividends of $ .15 per share. Our board of directors approved a $ .05 per share increase in the quarterly cash dividend on our common stock to $ .20 per share in the 2023 second quarter, and declared quarterly dividends at this higher rate for the 2023 third and fourth quarters. All dividends declared during 2025 , 2024 and 2023 were also paid during those years. Quarterly cash dividends declared and paid during 2025 , 2024 and 2023 totaled $ 1.00 per share, $ .95 per share and $ .70 per share, respectively. 90 Treasury Stock. In addition to the shares purchased pursuant to our share repurchase program, we acquired $ 23.9 million , $ 25.0 million and $ 14.2 million of our common stock in 2025 , 2024 and 2023 , respectively. A portion of the common stock acquired in 2025 , 2024 and 2023 consisted of previously issued shares delivered to us by employees to satisfy their withholding tax obligations on the vesting of PSU s and restricted stock awards or of forfeitures of previous restricted stock awards. Treasury stock is recorded at cost. Differences between the cost of treasury stock and the reissuance proceeds are recorded to paid-in capital. These transactions are not considered repurchases under the share repurchase program described above. In October 2024, we retired 27,557,428 shares of our treasury stock. Upon the retirement of the treasury stock, we deducted the par value from common stock and reflected the excess of cost over par value as a reduction to retained earnings. Note 20. Accumulated Other Comprehensive Loss The following table presents the changes in the balances of each component of accumulated other comprehensive loss (in thousands): Postretirement Benefit Plan Adjustments Total Accumulated Other Comprehensive Loss Balance at November 30, 2023 $ ( 3,671 ) Other comprehensive income before reclassifications 416 Amounts reclassified from accumulated other comprehensive loss (a) ( 461 ) Income tax expense related to items of other comprehensive loss 12 Other comprehensive loss, net of tax ( 33 ) Balance at November 30, 2024 ( 3,704 ) Other comprehensive income before reclassifications 464 Amounts reclassified from accumulated other comprehensive loss (a) ( 237 ) Income tax expense related to items of other comprehensive income ( 61 ) Other comprehensive income, net of tax 166 Balance at November 30, 2025 $ ( 3,538 ) (a) Amount is comprised solely of the amortization of net actuarial gain. The accumulated other comprehensive loss component is included in the computation of net periodic benefit costs as further discussed in Note 22 – Postretirement Benefits . There is no estimated prior service cost expected to be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2026. Note 21 . Employee Benefit and Stock Plans Most of our employees are eligible to participate in the KB Home 401(k) Savings Plan (“ 401(k) Plan ”) under which we match employee contributions up to 6 % of eligible compensation per payroll period. The aggregate cost of the 401(k) Plan to us was $ 9.0 million in 2025 , $ 8.8 million in 2024 and $ 8.3 million in 2023 . The assets of the 401(k) Plan are held by a third- party trustee, with an affiliate of the trustee managing some fund options offered by the 401(k) Plan. The 401(k) Plan participants may direct the investment of their funds among one or more of the several fund options offered by the 401(k) Plan . As of November 30, 2025 , 2024 and 2023 , approximately 4 % , 6 % and 5 % , respectively, of the 401(k) Plan ’s net assets at each period were invested in our common stock. Approval of the Amended and Restated KB Home 2014 Equity Incentive Plan. We maintain one active equity compensation plan, the Amended and Restated KB Home 2014 Equity Incentive Plan (“Amended and Restated 2014 Plan”), with an aggregate share grant capacity for stock-based awards to our employees, non-employee directors and consultants of 18,200,000 shares. In addition, if an award made under the Amended and Restated KB Home 2014 Equity Incentive Plan subsequently expires or is canceled, forfeited or settled for cash, then any shares associated with such award may, to the extent of such expiration, cancellation, forfeiture or cash settlement, be used again for new grants under the plan, and shares tendered or withheld to satisfy tax withholding obligations with respect to a full value award may be used again for new grants under the plan. Under the Amended and Restated 2014 Plan, grants of stock options and other similar awards reduce the share grant capacity on a 1 -for-1 basis, and grants of restricted stock and other similar “full value” awards reduce the share grant capacity 91 on a 1.78 -for-1 basis. Any shares that again become available for grant will be added back to the equity incentive plan’s available grant capacity in the same manner in which they were initially deducted ( i.e ., 1-for-1 or 1.78-for-1). The Amended and Restated 2014 Plan provides that stock options may be awarded for periods of up to 10 years , and enables us to grant other stock-based awards and cash bonuses. Stock-Based Compensation. With the approval of the management development and compensation committee, consisting entirely of independent members of our board of directors, we have provided compensation benefits to certain of our employees in the form of stock options, restricted stock and PSU s. Certain stock-based compensation benefits are also provided to our non-employee directors pursuant to the Non-Employee Directors Compensation Plan (“Director Plan”). Compensation expense related to equity-based awards is included in selling, general and administrative expenses in our consolidated statements of operations. Stock-based compensation expense for 2025 included $ 16.0 million recognized on an accelerated basis for certain equity awards granted in October 2025 that included new provisions for accelerated vesting of restricted stock and continued vesting of PSUs for long-tenured employees upon retirement. The following table presents our stock-based compensation expense (in thousands): Years Ended November 30, 2025 2024 2023 Restricted stock $ 14,956 $ 10,699 $ 9,659 PSUs 29,630 22,296 23,065 Director awards 1,652 1,475 1,888 Total $ 46,238 $ 34,470 $ 34,612 Stock Options. Stock option transactions are summarized as follows: Years Ended November 30, 2025 2024 2023 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Options Weighted Average Exercise Price Options outstanding at beginning of year 418,141 $ 16.17 1,109,567 $ 15.50 1,674,393 $ 15.56 Granted — — — — — — Exercised ( 67,277 ) 15.94 ( 691,426 ) 15.09 ( 564,826 ) 15.68 Cancelled — — — — — — Options outstanding at end of year 350,864 $ 16.21 418,141 $ 16.17 1,109,567 $ 15.50 Options exercisable at end of year 350,864 $ 16.21 418,141 $ 16.17 1,109,567 $ 15.50 Options available for grant at end of year 7,203,338 7,794,922 8,245,553 There were no stock options granted in 2025 , 2024 or 2023 . We have not granted any stock option awards since 2016. The total intrinsic value of stock options exercised was $ 3.2 million in 2025 , $ 32.7 million in 2024 and $ 17.4 million in 2023 . The aggregate intrinsic value of both stock options outstanding and stock options exercisable was $ 16.9 million at November 30, 2025 , $ 27.8 million at November 30, 2024 , and $ 40.6 million at November 30, 2023 . The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the price of the option. All of the stock options outstanding and stock options exercisable at November 30, 2025 had an exercise price of $ 16.21 and a remaining contractual life of .8 years . At November 30, 2025 , there was no unrecognized stock-based compensation expense related to stock option awards as all these awards were fully vested. Restricted Stock. From time to time, we grant restricted stock to various employees as a compensation benefit. During the restriction periods, these employees are entitled to vote and to receive cash dividends on such shares. Except as to recipients of the restricted stock awards granted in October 2025 who were retirement-eligible on the grant date or who become retirement- eligible during the standard vesting period, the restrictions imposed with respect to the shares granted lapse in installments within, or in full at the end of, three years after their grant date if certain conditions are met. 92 Restricted stock transactions are summarized as follows: Years Ended November 30, 2025 2024 2023 Shares Weighted Average per Share Grant Date Fair Value Shares Weighted Average per Share Grant Date Fair Value Shares Weighted Average per Share Grant Date Fair Value Outstanding at beginning of year 457,140 $ 50.45 588,167 $ 21.29 543,886 $ 19.50 Granted 165,707 58.79 181,287 74.46 329,209 41.78 Vested ( 263,561 ) 44.73 ( 292,217 ) 37.48 ( 268,696 ) 42.12 Cancelled ( 39,258 ) 51.18 ( 20,097 ) 35.88 ( 16,232 ) 32.24 Outstanding at end of year 320,028 $ 59.43 457,140 $ 50.45 588,167 $ 21.29 As of November 30, 2025 , we had $ 15.2 million of total unrecognized compensation cost related to restricted stock awards that will be recognized over a weighted average period of approximately three years . Performance-Based Restricted Stock Units. On October 9, 2025, we granted PSUs to certain employees. Each PSU grant corresponds to a target amount of our common stock (“ Award Shares ”). Each PSU entitles the recipient to receive a grant of between 0 % and 200 % of the recipient’s Award Shares , and will vest based on our achieving, over a three -year period commencing on December 1, 2025 and ending on November 30, 2028, specified levels of (a) cumulative adjusted earnings per share; (b) average adjusted return on invested capital; and (c) revenue growth performance relative to a peer group of high- production public homebuilding companies. The grant date fair value of each such PSU was $ 57.59 . Upon vesting, each PSU recipient is entitled to receive a proportionate amount of credited cash dividends that are paid in respect of one share of our common stock with a record date between the grant date and the date the compensation committee of our board of directors determines the applicable performance achievements, if any. On October 10, 2024, we granted PSUs to certain employees with generally similar terms as the 2025 PSU grants, except that the applicable performance period commenced on December 1, 2024 and ends on November 30, 2027. The grant date fair value of each such PSU was $ 79.81 . On October 5, 2023, we granted PSUs to certain employees with generally similar terms as the 2025 PSU grants, except that the applicable performance period commenced on December 1, 2023 and ends on November 30, 2026. The grant date fair value of each such PSU was $ 44.10 . PSU transactions are summarized as follows: Years Ended November 30, 2025 2024 2023 Shares Weighted Average per Share Grant Date Fair Value Shares Weighted Average per Share Grant Date Fair Value Shares Weighted Average per Share Grant Date Fair Value Outstanding at beginning of year 1,156,049 $ 44.12 1,225,415 $ 21.18 1,273,157 $ 19.70 Granted 546,814 57.59 450,270 70.66 554,523 39.80 Vested ( 530,015 ) 39.31 ( 519,636 ) 40.06 ( 602,265 ) 35.20 Cancelled ( 20,282 ) 40.54 — — — — Outstanding at end of year 1,152,566 $ 49.01 1,156,049 $ 44.12 1,225,415 $ 21.18 The number of shares of our common stock actually granted to a recipient, if any, upon the vesting of a PSU depends on the degree of achievement of the applicable performance measures during the designated three -year performance period. The shares of our common stock that were granted under the terms of PSUs that vested in 2025 included an aggregate of 235,562 shares above the target amount awarded to the eligible recipients based on performance from December 1, 2021 through November 30, 2024. PSUs that vested in 2024 included an aggregate of 259,818 shares above the target amount based on performance from December 1, 2020 through November 30, 2023, and PSUs that vested in 2023 included an aggregate of 267,674 shares above the target amount based on our performance from December 1, 2019 through November 30, 2022. PSUs do not have dividend or voting rights during the performance period. Compensation cost for PSUs is initially estimated based 93 on target performance achievement and adjusted as appropriate throughout the performance period. Accordingly, future compensation costs associated with outstanding PSUs may increase or decrease based on the probability and extent of achievement with respect to the applicable performance measures. At November 30, 2025 , total unrecognized compensation cost related to unvested PSUs was $ 32.1 million , which is expected to be recognized over a weighted-average period of approximately three years . Director Awards. We have granted deferred common stock awards to our non-employee directors pursuant to the terms of the Director Plan and elections made by each director. At November 30, 2025 , 2024 and 2023 , the aggregate outstanding deferred common stock awards granted under the Director Plan were 100,840 , 86,504 and 271,683 , respectively. In addition, we have granted common stock on an unrestricted basis to our non-employee directors on the grant date pursuant to the Director Plan and elections made by each director. Grantor Stock Ownership Trust. At November 30, 2023, we had a grantor stock ownership trust (“ Trust ”), which was established in 1999 and administered by a third-party trustee, that held and distributed the shares of common stock acquired to support certain employee compensation and employee benefit obligations under our existing stock option plan, the 401(k) Plan and other employee benefit plans. For financial reporting purposes, the Trust was consolidated with us, and therefore any dividend transactions between us and the Trust were eliminated. Acquired shares held by the Trust were valued at the market price on the date of purchase and shown as a reduction to stockholders’ equity in the consolidated balance sheets. The difference between the Trust share value and the market value on the date shares were released from the Trust was included in paid-in capital. Common stock held in the Trust was not considered outstanding in the computations of earnings per share. The Trust terminated on September 30, 2024. The 6,705,247 shares held by the Trust were transferred to treasury stock. Note 22 . Postretirement Benefits We have a supplemental non-qualified, unfunded retirement plan, the KB Home Retirement Plan (“ Retirement Plan ”), effective as of July 11, 2002, pursuant to which we have offered to pay supplemental pension benefits to certain designated individuals (consisting of current and former employees) in connection with their retirement. The Retirement Plan was closed to new participants in 2004. We also have an unfunded death benefit plan, the KB Home Death Benefit Only Plan (“ DBO Plan ”), implemented on November 1, 2001, for certain designated individuals (consisting of current and former employees). The DBO Plan was closed to new participants in 2006. In connection with these plans and two other minor benefit programs, we have purchased cost recovery life insurance contracts on the lives of the designated individuals. The insurance contracts associated with the Retirement Plan and DBO Plan are held by a trust. The trust is the owner and beneficiary of such insurance contracts. The amount of the insurance coverage under the contracts is designed to provide sufficient funds to cover all costs of the plans if assumptions made as to employment term, mortality experience, policy earnings and other factors, as applicable, are realized. The cash surrender value of the Retirement Plan life insurance contracts was $ 29.3 million at November 30, 2025 and $ 31.4 million at November 30, 2024 . We recognized investment gains on the cash surrender value of the Retirement Plan life insurance contracts of $.3 million in 2025 , $.8 million in 2024 and $.1 million in 2023 . In 2025 , 2024 and 2023 , we paid $ 2.5 million , $ 2.4 million and $ 2.3 million , respectively, in benefits under the Retirement Plan to eligible former employees. The cash surrender value of the DBO Plan life insurance contracts was $ 17.7 million at November 30, 2025 and $ 17.3 million at November 30, 2024 . We recognized investment gains on the cash surrender value of the DBO Plan life insurance contracts of $.4 million in 2025 , $.5 million in 2024 and $.1 million in 2023 . In 2024, we paid $.3 million in benefits under the DBO Plan. We paid no benefits under the DBO Plan in 2025 and 2023. The net periodic benefit cost of our Retirement Plan and DBO Plan is included in selling, general and administrative expenses in our consolidated statements of operations and consisted of the following (in thousands): Years Ended November 30, 2025 2024 2023 Interest cost $ 2,962 $ 3,042 $ 2,884 Service cost 652 695 720 Amortization of net actuarial gain ( 229 ) ( 438 ) ( 112 ) Total $ 3,385 $ 3,299 $ 3,492 The liabilities related to these plans were $ 61.6 million at November 30, 2025 and $ 60.8 million at November 30, 2024 , and are included in accrued expenses and other liabilities in the consolidated balance sheets. For the years ended November 30, 2025 and 2024 , the discount rates we used for the plans were approximately 4.8 % and 4.9 % , respectively. 94 Benefit payments under our Retirement Plan and DBO Plan are expected to be paid during each year ending November 30 as follows: 2026 — $ 3.7 million ; 2027 — $ 4.2 million ; 2028 — $ 4.8 million ; 2029 — $ 5.0 million ; 2030 — $ 5.1 million ; and for the five years ended November 30, 2035 — $ 23.0 million in the aggregate. Note 23. Supplemental Disclosure to Consolidated Statements of Cash Flows The following are supplemental disclosures to the consolidated statements of cash flows (in thousands): Years Ended November 30, 2025 2024 2023 Summary of cash and cash equivalents at the end of the year: Homebuilding $ 228,614 $ 597,973 $ 727,076 Financial services 1,829 1,220 266 Total $ 230,443 $ 599,193 $ 727,342 Supplemental disclosure of cash flow information: Interest paid, net of amounts capitalized $ ( 413 ) $ 585 $ 598 Income taxes paid 115,788 196,730 142,232 Income taxes refunded 2,518 5,502 1 Supplemental disclosure of non-cash activities: Increase in inventories due to distributions of land and land development from an unconsolidated joint venture 6,011 8,402 9,533 Increase (decrease) in consolidated inventories not owned ( 10,635 ) 4,516 16,427 Inventories acquired through seller financing — 3,149 2,891 95 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of KB Home: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of KB Home (the Company) as of November 30, 2025 and 2024 , the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended November 30, 2025 , and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at November 30, 2025 and 2024 , and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2025 , in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of November 30, 2025 , based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated January 23, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates. 96 Self-insurance Liabilities Description of the Matter At November 30, 2025 , the Company’s self-insurance liability of $179.2 million was primarily related to construction defect claims. As disclosed in Note 17 to the consolidated financial statements, the Company’s self-insurance liability for construction defects is based on an analysis prepared by a third-party actuary that uses historical claim and expense data as well as industry data to estimate the cost of all unpaid losses, including estimates related to claims incurred but not yet reported. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. Auditing the Company’s self-insurance liability is complex and highly judgmental due to the complexity of the actuarial methods used to estimate losses and the degree of subjective judgment required to assess the underlying assumptions, which required us to involve our actuarial specialists. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a construction defect claim is made and ultimately resolved; uncertainties regarding such claims relative to the markets and types of products built; and legal or regulatory actions and interpretations, among other factors. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s self-insurance liability estimation process including controls over the data and assumptions used in the analysis. To test the Company’s self-insurance liability, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims data utilized by the Company’s third-party actuary, testing the existence and terms of third-party insurance policies, and involving our actuarial specialists to assist in our evaluation of the methodologies and assumptions applied by management’s third-party actuary. Additionally, we compared the Company’s recorded self-insurance liability to estimated ranges which our actuarial specialist developed based on independently selected assumptions. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1991. Los Angeles, California January 23, 2026 97 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.