<SEC-DOCUMENT>0000950123-11-023224.txt : 20111227
<SEC-HEADER>0000950123-11-023224.hdr.sgml : 20111226
<ACCEPTANCE-DATETIME>20110308171914
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-11-023224
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20110308

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KB HOME
		CENTRAL INDEX KEY:			0000795266
		STANDARD INDUSTRIAL CLASSIFICATION:	OPERATIVE BUILDERS [1531]
		IRS NUMBER:				953666267
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		10990 WILSHIRE BLVD
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90024
		BUSINESS PHONE:		3102314000

	MAIL ADDRESS:	
		STREET 1:		10990 WILSHIRE BLVD
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90024

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KAUFMAN & BROAD HOME CORP
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">KB HOME<BR>
10990 Wilshire Boulevard<BR>
Los Angeles, California 90024<BR>
March&nbsp;8, 2011
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">John Cash<BR>
Accounting Branch Chief<BR>
Division of Corporation Finance<BR>
United States Securities and Exchange Commission<BR>
100 F Street, NE<BR>
Washington, D.C. 20549-7010

</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">Re:</TD>
    <TD>&nbsp;</TD>
    <TD>KB Home<br>
Form&nbsp;10-K for the fiscal year ended November&nbsp;30, 2010<br>
Filed January&nbsp;31, 2011<br>
File #1-9195</TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Cash:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This letter responds to the comments of the staff (&#147;Staff&#148;) of the Division of Corporation Finance
of the Securities and Exchange Commission (the &#147;Commission&#148;) contained in your letter dated
February&nbsp;22, 2011 regarding the Form 10-K for the fiscal year ended November&nbsp;30, 2010 that we filed
with the Commission on January&nbsp;31, 2011 (the &#147;Form&nbsp;10-K&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Below we have reprinted these comments in bold, followed by our responses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Form&nbsp;10-K for the fiscal year ended November&nbsp;30, 2010</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>South Edge, LLC Litigation, page 25</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>With a view towards future disclosure, please tell us what consideration you have given to
quantifying an estimate of the &#147;potentially significant amount for accrued and unpaid interest
and attorneys&#146; fees in respect of the Loans&#148; and describing the grounds for the &#147;offsets or
defenses&#148; that you believe could be available to you.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Estimate of Accrued and Unpaid Interest and Attorneys&#146; Fees</U>. With the court&#146;s<SUP style="FONT-size: 85%; vertical-align: text-top">1</SUP>
February&nbsp;3, 2011 entry of an order for relief on the Chapter&nbsp;11 involuntary bankruptcy petition
filed against South Edge, LLC (&#147;South Edge&#148;), we are updating our analysis of our potential
exposure for accrued and unpaid interest and attorneys&#146; fees due under the limited several
repayment guaranty (the &#147;Springing Guaranty&#148;) we provided to the lenders in connection with the
loans made to South Edge (the &#147;Loans&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Springing Guaranty is a partial guarantee of the Loans according to which the amount of
principal and interest owed is based on a formula. The Loans bear variable rates of base and
default interest. In filings made as part of the involuntary bankruptcy petition, the lenders
claimed a total amount of accrued and unpaid interest owed by South Edge. The lenders have not
made a demand on us under the Springing Guaranty. Based in part on the lenders&#146; claims in the
involuntary bankruptcy petition, as of February&nbsp;28, 2011, we estimate that the amount the lenders
may seek from us for accrued and unpaid interest and attorneys&#146; fees in respect of the Loans could
be between $25&nbsp;million and $35&nbsp;million. This estimate is based on the information known to us as
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="FONT-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD><I>JPMorgan Chase Bank, N.A. v. South Edge, LLC (Case No.&nbsp;10-32968-bam)</I>, U.S. Bankr. Ct., D. Nevada.</TD>
</TR>

</TABLE>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of the date of this letter, and it may change if new information subsequently comes to our
attention, including, but not limited to, a demand by the lenders under the Springing Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Potential Offsets or Defenses to the Springing Guaranty</U>. We believe we have several
grounds to defend against a demand made under the Springing Guaranty. South Edge has appealed the
court&#146;s decision; if that appeal is successful, the order for relief would be vacated, which, we
believe, would provide a defense against enforcement of the Springing Guaranty. We also believe
that the lenders used the involuntary bankruptcy petition against South Edge primarily as a way to
trigger the Springing Guaranty&#146;s obligations, and that this provides a defense to its enforcement.
In addition, we believe that there are or could be grounds to reduce or offset amounts potentially
due under the Springing Guaranty based on, among other things, the lenders&#146; use of infrastructure
development funds that have been pledged to them, or future sales of land by or on behalf of South
Edge, including a potential sale or sales of land by the trustee in the bankruptcy case, either as
part of a plan of reorganization for South Edge or otherwise. While we believe we have reasonable
grounds to assert them, if necessary, we can make no assurances that our potential offsets or
defenses will successfully prevent or meaningfully reduce the impact of an attempt by the lenders
to enforce the Springing Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We will provide disclosure that addresses these matters in our Quarterly Report on Form 10-Q for
the quarter ended February&nbsp;28, 2011 and in future filings (as relevant).
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your general cautionary language in the final paragraph of this subsection (&#147;While
there are defenses to the above legal proceedings . . .&#148;). We further note your specific
disclosures about your potential responsibility under the springing repayment guaranty. In
view of the specific disclosures, the general cautionary language appears to be inappropriate
as it dilutes the impact of your specific disclosures. In future filings, if you retain
general cautionary language of this type, please harmonize it with any specific disclosure
that you make about the springing repayment guaranty, South Edge, or related matters.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our future filings will reflect this comment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Liquidity and Capital Resources, page 44</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>With a view towards future disclosure, please tell us what consideration you have given to
discussing and analyzing the South Edge bankruptcy proceeding and your related potential
payment obligation under the South Edge springing repayment guaranty as known demands,
commitments, events, or uncertainties that are reasonably likely to result in your liquidity
increasing or decreasing in a material way. In this regard, we note your disclosure under
Item&nbsp;2.04 of the </B><B>Form 8-K</B><B> filed on February&nbsp;4, 2011. Please refer to </B><B>Item 303(a)</B><B> of
Regulation&nbsp;S-K.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In consideration of the February&nbsp;3, 2011 court decision, and based on the information known to us
as of the date of this letter, we expect we will include disclosure in our Quarterly Report on Form
10-Q for the quarter ended February&nbsp;28, 2011 and in future filings (as relevant) substantially as
follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We anticipate that if a demand is made under the Springing Guaranty, there would be a material
impact on our liquidity if we are required to satisfy our maximum potential obligation under it.
As of February&nbsp;28, 2011, we believe our maximum potential obligation under the Springing Guaranty
is approximately $180&nbsp;million in aggregate principal amount, plus $25&nbsp;million to $35&nbsp;million that
we estimate the lenders may claim to be owed in accrued and unpaid interest and
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">attorneys&#146; fees. If we are required to satisfy such an obligation, we would likely use cash and
cash equivalents, which would reduce our liquidity. Based on our capital position at February&nbsp;28,
2011, which included approximately $736&nbsp;million of cash and cash equivalents, we believe that even
if we are required to use cash and cash equivalents to satisfy our maximum potential obligation
under the Springing Guaranty, we will have adequate liquidity to meet our current and reasonably
anticipated future needs for funds to carry out our business in the ordinary course. We also
believe that we will have sufficient access to external financing to obtain further liquidity, if
deemed necessary. Any payments made to satisfy our potential Springing Guaranty obligations will
reduce the debt encumbering the property owned by South Edge.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are presently carrying out the closing process for our fiscal quarter ended February&nbsp;28, 2011.
The above estimate of our potential obligation for accrued and unpaid interest and attorneys&#146; fees
under the Springing Guaranty is based on the information known to us as of the date of this letter,
and this estimate may change if new information subsequently comes to our attention,
including, but not limited to, a demand by the lenders under the Springing Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>MD&#038;A &#151; Critical Accounting Policies, page 50</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Inventory Impairments and Land Option Contract Abandonments, page 51</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We remind you that in your letter dated March&nbsp;20, 2009 related to our review of your Form
10-K for the fiscal year ended November&nbsp;30, 2008 you agreed to revise future filings to also
disclose the number of communities you evaluated for impairment during each period. Please
provide these disclosures in all future filings.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the Form 10-K, we disclosed that we evaluated all owned inventory for impairment on a quarterly
basis as follows: &#147;... each land parcel or community in our owned inventory is assessed to
determine if indicators of potential impairment exist.&#148; We understood this to satisfy the request
in the prior comment letter, as it informs investors of the proportion of our owned inventory that
we evaluated (100%). In future filings, should we ever evaluate less than all owned inventory, we
will disclose the number of land parcels and communities evaluated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Note 14. Commitments and Contingencies, page 80</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>In regard to certain warranties, we note your disclosure that you are continuing to review
whether there are any additional homes delivered in Florida or other locations that contain or
may contain defective drywall materials manufactured in China and that, depending on the
outcome of this review and your actual claims experience, you may incur additional
warranty-related costs and increases in your warranty liability in future periods. With a
view to enhanced future disclosures, please provide us a more specific and comprehensive
explanation of your review process, including the current status and the anticipated timeframe
for completion.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In future filings (as relevant), we will provide disclosure substantially as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The drywall used in the construction of our homes is purchased and installed by subcontractors.
Our subcontractors obtained drywall material from multiple domestic and foreign sources through late 2008. In many
cases, the origin of the drywall material obtained by our subcontractors before December&nbsp;2008
cannot be determined. As a result, we are unable to readily identify the total number of homes
that may contain allegedly defective drywall material manufactured in
China.  We have
identified homes that contain or may contain such drywall material primarily by responding to
homeowner-initiated warranty claims or customer service questions regarding such material or
regarding conditions or items in a home that may be affected by such material.
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Additionally, in certain communities in Florida where there has been a high number of affected
homes identified through the warranty/customer service process, we have proactively undertaken
community-wide reviews and identified more homes. We expect to complete all such identified
community-wide reviews by the end of May&nbsp;2011. Our customer service personnel or, in some
instances, third-party consultants handle these matters. While we continue to respond to
individual warranty/customer service requests as they are made, the number of additional affected
homes identified each quarter has fallen significantly since the third quarter of 2009 to a nominal
amount. As a result, and based on our experience to date of the nature of the problems caused by
the allegedly defective drywall material and the steps we have taken since late 2008 to direct our
subcontractors to obtain only domestically sourced drywall material, we anticipate that after
completion of the review process we will have identified substantially all potentially affected
homes. Depending on the number of additional affected homes identified and the actual costs we
incur to complete the review process and repair identified homes in future periods, including costs
to provide affected homeowners with temporary housing, we may increase or decrease the estimates of
our warranty liability with respect to this issue.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Based on your specific warranty disclosures related to homes that contain defective drywall
materials manufactured in China, please tell us, and disclose in future filings, the number of
claims you resolved during FY 2010 and FY 2009 for the payments you made of $25.5&nbsp;million and
$1.3&nbsp;million. Also, based on your disclosures, please help us better understand and clarify
in future filings why, in light of the FY 2010 payments, the number of unresolved claims
increased and the remaining liability decreased from November&nbsp;30, 2009 to November&nbsp;30, 2010
and why it appears that no additional amounts were accrued during FY 2010. Please provide us
a separate roll-forward related to these claims.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the third and fourth quarters of our 2009 fiscal year, we identified 229 homes as containing or
possibly containing allegedly defective drywall material manufactured in China, and estimated the
costs to repair these homes to be approximately $15.7&nbsp;million. We paid $1.3&nbsp;million in our 2009
fiscal year to repair identified homes, but because we were at an early stage in our review process
and in making repairs on identified homes, no repairs were resolved by November&nbsp;30, 2009.
Therefore, our liability at November&nbsp;30, 2009 of $14.4&nbsp;million for repair costs related to all 229
identified homes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For these purposes, we consider repairs for identified homes to be &#147;resolved&#148; when all repairs are
complete and all repair costs are fully paid, and repairs for identified homes to be &#147;unresolved&#148;
if repairs are not complete and/or there are repair costs remaining to be paid.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During our 2010 fiscal year, we identified an additional 208 affected homes. Based on the
methodology we used in 2009 to estimate repair costs, we estimated the costs to repair these
additional affected homes to be approximately $14.3&nbsp;million. In 2010, as we developed a history of
actual costs incurred in making repairs to affected homes, which we have found typically take four
to six months to complete once started, we increased our overall estimate of repair costs by $8.1
million. Despite the additional homes identified and the increase in our estimate of repair costs
for affected homes, we did not increase our overall warranty liability in our 2010 fiscal year
because we determined that the liability at the end of each quarter was sufficient with respect to
our then-remaining estimated repair costs and our overall warranty obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We paid $25.5&nbsp;million in our 2010 fiscal year to repair identified homes. Of that total, $12.4
million related to 141 identified homes for which all repairs were resolved. The remaining $13.1
million paid in our 2010 fiscal year related to 296 identified homes for which repairs were
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">unresolved at November&nbsp;30, 2010. Therefore, our liability of $11.3&nbsp;million for repair costs
related to these 296 identified homes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Due to the time required to repair identified homes and the timing of payments for the costs of
such repairs, the liability for repair costs relating to identified homes was lower at November&nbsp;30,
2010 than at November&nbsp;30, 2009, even though the liability was related to a greater number of homes
(<I>i.e.</I>, 296 identified homes compared to 229 identified homes). The year-over-year decrease in the
liability reflected that the repairs on the 296 identified homes at November&nbsp;30, 2010 were at a
much later stage of completion (with less costs remaining to be paid) than the repairs on the 229
identified homes at November&nbsp;30, 2009. Furthermore, at November&nbsp;30, 2010, repairs on 97 of the 296
identified homes represented in the $11.3&nbsp;million liability had been completed, though there were
costs remaining to be paid. In contrast, at November&nbsp;30, 2009, repairs had not been completed on
any of the 229 identified homes represented in the $14.4&nbsp;million liability. This is further
illustrated in the following roll-forward (dollars in thousands):
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Amount</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">of Homes</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">of Liability</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
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<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of November&nbsp;30, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Homes identified in 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,726</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Homes under repair</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,319</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of November&nbsp;30, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,407</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Homes identified in 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,284</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revision to estimated repair costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Homes under repair or repaired, but
with costs remaining to be paid
(unresolved)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,085</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Homes completed and with all costs
paid (resolved)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(141</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,370</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of November&nbsp;30, 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,348</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Note 15. Legal Matters, page 81</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your disclosures regarding the South Edge, LLC litigation. Given that you provided
certain guaranties to the lenders, please help us understand what defenses you believe may be
available to you to prevent or minimize the enforcement of the Springing Repayment Guaranty.
Please tell us how much you accrued for this matter at November&nbsp;30, 2010 and how you assessed
the probability of a loss at that date. Please also fully explain to us why, at November&nbsp;30,
2010, you were unable to reasonably estimate a meaningful range of potential outcomes. In
addition, please tell us if and how you have reassessed this matter as a result of the court&#146;s
action you discussed in your </B><B>Form 8-K</B><B> filed on February&nbsp;4, 2011. In this regard, please
provide us an estimate of the accrued and unpaid interest and attorney&#146;s fees you may be
required to pay and tell us if and when you accrued any amounts related to these fees.</B></TD>
</TR>




</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Response</U>:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please see our response to Question 1 regarding the potential offsets and defenses that we believe
may be available to us to prevent or minimize an attempt by the lenders to enforce the Springing
Guaranty as well as regarding our estimate of the accrued and unpaid interest and attorneys&#146; fees
the lenders may seek from us under the Springing Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">
We did not have an accrual on our balance sheet for our potential obligations under the Springing Guaranty (including as to accrued and unpaid
interest and attorneys&#146; fees potentially due under the Springing Guaranty) at November&nbsp;30, 2010
because a loss under the Springing Guaranty was not probable or estimable at that date. By its
terms, the Springing Guaranty&#146;s obligations do not come into effect unless and until there is a
demand from the lenders under it, which demand must follow the occurrence of (a)&nbsp;an involuntary
bankruptcy proceeding or an involuntary bankruptcy petition filed against South Edge that is not
dismissed within 60&nbsp;days or for which an order or decree approving or ordering any such proceeding
or petition is entered; or (b)&nbsp;a voluntary bankruptcy commenced by South Edge. At November&nbsp;30,
2010, no involuntary or voluntary bankruptcy proceeding or petition had been filed or was pending.
The lenders filed the Chapter&nbsp;11 involuntary bankruptcy petition against South Edge on December&nbsp;9,
2010, and at the time we filed the Form 10-K, a trial on this petition was in process and the
outcome was uncertain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At November&nbsp;30, 2010, we had a reserve with respect to South Edge as a whole that took into account
our potential obligations under the Springing Guaranty as one of multiple factors impacting the
overall carrying value of the project. To help explain this reserve, we believe it will be useful
to provide some additional background on South Edge. South Edge is a joint venture that was formed
with the intent to acquire certain real property located near Las Vegas, Nevada and to develop a
residential community on the land. KB HOME Nevada Inc., our wholly-owned subsidiary, is a member
of South Edge (with a 48.5% interest), together with unrelated homebuilders and a third-party
property development firm. South Edge purchased the real property in 2004 using equity contributed
by the members and proceeds from the Loans made by the lenders. The Loans are a direct obligation
of South Edge and are secured by the underlying real property and other South Edge assets. In
connection with the Loans, we and each of the parent companies of the other South Edge members,
together with each of their respective subsidiaries that serve as members of South Edge, including
our subsidiary KB HOME Nevada Inc., made certain guarantees to the lenders. For us, this included
a completion guaranty, a limited guaranty and the Springing Guaranty. South Edge expected to repay
the Loans through sales of land to the participating members but, as conditions in the local
housing market deteriorated sharply after 2006 and two original members filed for bankruptcy, South
Edge ceased making payments on the Loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On a quarterly basis, we assess the overall carrying value of long-lived assets such as inventory
and investments in joint ventures. These analyses take into account in a comprehensive manner
several factors that are specific to each such asset based on the information known to us at the
time the analysis is made. At November&nbsp;30, 2010, in assessing South Edge, we assumed that South
Edge would pay off the Loans at a discount, own the underlying real property free of the Loans, and
then sell the property. We assumed that the Loans would be paid off at a discount through
negotiations with the lenders based on uncertainty regarding the enforcement of the guarantees and
risks of litigation. We also assumed that South Edge would obtain financial support from the
members and their respective parent companies, including us, to pay off the discounted debt. We
also considered, among other things, the value of the land owned by South Edge given local market
conditions, and a probability of loss from our potential obligations under our South Edge
guarantees on a combined basis and under various scenarios. In addition, we considered our
potential liability under the Lender Litigation and under the July&nbsp;6, 2010
</DIV>




<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">arbitration decision that are described in the Form 10-K, which involve the completion guaranty and
other matters. The Springing Guaranty, together with the other guarantees we provided to the
lenders, was a factor in this analysis because any obligations associated with these guarantees, if
realized, would increase our South Edge investment and thereby impact our analysis of the overall
carrying value. The Springing Guaranty, however, has never been the only focus of this analysis.
Based on our analysis of the above-described factors as of November&nbsp;30, 2010, we had a reserve of
approximately $122&nbsp;million relating to South Edge.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Because of the complex range of factors impacting the project, we determined at November&nbsp;30, 2010
and at the time of filing the Form 10-K that we could not provide a meaningful range of potential
outcomes with respect to the various development, litigation/arbitration and valuation matters
involving South Edge, many of which had long been the subject of ongoing discussions and
negotiations between and among the lenders and the South Edge members. Among the many factors
considered were (a)&nbsp;whether the lenders would be successful in the Lender Litigation seeking to
enforce completion guarantees and other claims, and also to force the South Edge members to
undertake certain actions with respect to South Edge; (b)&nbsp;whether the lenders would be successful
in their Chapter&nbsp;11 involuntary bankruptcy petition against South Edge and, if so, in seeking to
enforce the Springing Guaranty; (c)&nbsp;our potential liability to the lenders under our completion
guaranty and/or the Springing Guaranty, or what we might have to pay to the lenders to be released
from those guarantees; (d)&nbsp;how much South Edge&#146;s debt would be reduced if payments were made on
account of the various completion and/or repayment guarantees made by us, by the other parent
companies of the South Edge members and by the South Edge members (including KB HOME Nevada Inc.);
(e)&nbsp;our potential liability for certain damages arising from the July&nbsp;6, 2010 arbitration decision;
(f)&nbsp;the current value of the land owned by South Edge; (g)&nbsp;how the value of the land owned by South
Edge might be impacted through a revised development plan, either outside of or as a part of a
bankruptcy reorganization process if an order for relief were entered in the involuntary bankruptcy
petition; (h)&nbsp;how a revised development plan could affect the total development costs of the
project; and (i)&nbsp;the actions that might be taken in a bankruptcy by a Chapter&nbsp;11 trustee if an
order for relief were entered in the involuntary bankruptcy petition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In light of the February&nbsp;3, 2011 court decision, we are in the process of assessing the accounting
for our potential obligations under the Springing Guaranty as well as reassessing the overall
carrying value of South Edge, including potential enhancements to the project through a revised
development plan. As the court decision has resolved or recast several of the factors described
above, we anticipate that there may be changes to our reporting of our potential obligations under
the Springing Guaranty and our valuation of South Edge, and that any such changes will be reflected
in our Quarterly Report on Form 10-Q for the quarter ended February&nbsp;28, 2011 and other future
filings (as relevant).
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">* * *
</DIV>






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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We acknowledge that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We are responsible for the adequacy and accuracy of the disclosure in the filing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Staff comments or changes to disclosure in response to Staff comments do not foreclose
the Commission from taking any action with respect to the filing; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We may not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe this letter appropriately responds to each of the Staff&#146;s comments and questions. If
you have any further questions or comments, please do not hesitate to contact me at 310-231-4014,
Brian J. Woram, our Executive Vice President, General Counsel and Corporate Secretary, at
310-231-4040, or William R. Hollinger, our Senior Vice President and Chief Accounting Officer, at
310-231-4028.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Sincerely,
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="0%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="35%"></TD>
    <TD width="63%"></TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">
<BR>
/S/ JEFF J. KAMINSKI
<div style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</div>
Jeff J. Kaminski<BR>
<FONT style="white-space: nowrap">Executive Vice President and Chief Financial Officer</FONT><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">cc:</TD>
    <TD>&nbsp;</TD>
    <TD>Tricia Armelin, Staff Accountant<br>
Anne McConnell, Senior Staff Accountant<br>
Edward M. Kelly, Senior Counsel<br>
Dieter King, Senior Staff Attorney<br>
(U.S. Securities and Exchange Commission)<br></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"></TD>
    <TD>&nbsp;</TD>
    <TD>Brian J. Woram, Executive Vice President, General Counsel and Corporate Secretary<br>
William R. Hollinger, Senior Vice President and Chief Accounting Officer<br>
(KB Home)</TD>
</TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>




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