<SEC-DOCUMENT>0000950123-11-054314.txt : 20111227
<SEC-HEADER>0000950123-11-054314.hdr.sgml : 20111226
<ACCEPTANCE-DATETIME>20110526144925
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-11-054314
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20110526

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
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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>
May&nbsp;26, 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 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">Re:</TD>
    <TD width="1%">&nbsp;</TD>
    <TD> KB Home<br>
Form 10-K for the fiscal year ended November&nbsp;30, 2010<br>
Filed January&nbsp;31, 2011<br>
File No.&nbsp;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 May&nbsp;12,
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;) and the Form 10-Q for the quarterly period ended
February&nbsp;28, 2011 that we filed with the Commission on April&nbsp;11, 2011 (the &#147;Form&nbsp;10-Q&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Below we have reprinted the comments from the May&nbsp;12, 2011 letter 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>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>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your response to our prior comment two. We note that, at February&nbsp;28, 2011, you
determined you have a probable obligation of $211.8&nbsp;million related to the Springing Guaranty
and this amount is partially offset by the $75.2&nbsp;million estimated fair value of the South
Edge land subject to your guaranty. Based on your disclosures of the outstanding principal
balance of the South Edge loans, your percentage interest in South Edge, and your estimated
range of unpaid interest, please clarify how you determined the amount of your probable
obligation. Also, please clarify why your accrual for the loss on the loan guaranty that you
recorded during the period ended February&nbsp;28, 2011 was only $22.8&nbsp;million. In this regard, we
note from your letter dated March&nbsp;29, 2011 that, at November&nbsp;30, 2010, you determined a loss
related to the Springing Guaranty was not probable. Therefore, it is unclear to us if and why
you recorded reserves prior to February&nbsp;28, 2011 for the difference between your $211.8
million probable obligation and the $75.2&nbsp;million estimated fair value of the land.</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>Determination of Probable Springing Guaranty Obligation</U>. We estimated at February&nbsp;28, 2011
that our probable obligation in respect of the Springing Guaranty was $211.8&nbsp;million based on
discussions in February&nbsp;2011 with the other South Edge members and their respective parent
companies and the administrative agent for the lenders to South Edge. Our estimation also
reflected our view that resolving the matters discussed would likely occur through a bankruptcy
court-approved plan of reorganization for South Edge of which we would be a proponent (a &#147;Supported
Plan&#148;).
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In consideration of the foregoing, we estimated our probable obligation at February&nbsp;28, 2011 based
on the following assumptions: (a)&nbsp;that it was probable that the Springing Guaranty would be
enforced if the administrative agent for the lenders to South Edge brought a claim under it; (b)
that in a Supported Plan, as part of a negotiated consensual settlement, the consenting lenders
would accept a total of approximately $327&nbsp;million from certain of the South Edge members
(including KB HOME Nevada Inc.) and their respective parent companies (including us) to resolve the
lenders&#146; claims (including interest on the debt owed by South Edge and attorneys&#146; fees) against
South Edge in the bankruptcy case and their claims against the South Edge members and their
respective parent companies (including us and KB HOME Nevada Inc.) in the Lender Litigation (which
Lender Litigation is described in the Form 10-Q); (c)&nbsp;that the approximately $327&nbsp;million
settlement amount described in (b)&nbsp;would reflect the application to the debt owed by South Edge of
an additional sum of approximately $26&nbsp;million in infrastructure development funds already pledged
to the administrative agent for the lenders to South Edge; and (d)&nbsp;as stated in our April&nbsp;20, 2011
letter, that it was probable that we would acquire, pursuant to a Supported Plan, a portion of
South Edge land that had initially been allocated to two original South Edge members that declared
bankruptcy or were adjudicated bankrupt in 2008 in addition to the
South Edge land initially allocated to us, which would result in our share of the South Edge land increasing to approximately
64.8%. Therefore, we estimated at February&nbsp;28, 2011 that our payment in respect of the Springing
Guaranty would be approximately 64.8% of approximately $327&nbsp;million, or $211.8&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please note that while we believe it is probable that we will become a proponent of a Supported
Plan, we continue to support South Edge&#146;s appeal of the April&nbsp;28, 2011 decision of the U.S.
District Court to issue an order granting dismissal of appeals of the February&nbsp;3, 2011 court
decision to enter an order for relief on the Chapter&nbsp;11 involuntary bankruptcy petition filed
against South Edge and to appoint a trustee for South Edge. We are also participating in an appeal
of the U.S. District Court decision. By engaging in discussions that may result in our being a
proponent of a Supported Plan, we are not waiving the right to challenge the orders that are the
subject of the appeals. In addition, we continue to believe that we have potential offsets or
defenses against enforcement of the Springing Guaranty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Accrual for Loss on Loan Guaranty.</U> As described in our March&nbsp;8, 2011 and March&nbsp;29, 2011
letters, the facts and circumstances surrounding South Edge have changed substantially since we
became involved in the project in 2004, reflecting a complex and evolving mix of legal,
operational, strategic and financial factors, interests and events, many of which remain to be
resolved and have uncertain outcomes. Throughout this period, we have continued to assess the
South Edge project (including our potential obligation in respect of the Springing Guaranty) at
each quarterly reporting date using judgment and assumptions believed to be appropriate based on
the information known to us at the particular time each assessment was made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the reasons discussed in our March&nbsp;8, 2011 and March&nbsp;29, 2011 letters, we did not consider our
potential obligation in respect of the Springing Guaranty to be probable until the February&nbsp;3, 2011
court decision to enter an order for relief on the Chapter&nbsp;11 involuntary bankruptcy petition filed
against South Edge and to appoint a trustee for South Edge. Therefore, although the debt owed by
South Edge was a factor in our assessments, as was the Springing Guaranty, we did not record a
liability specifically for the Springing Guaranty until the quarter ended February&nbsp;28, 2011. As
described in our March&nbsp;29, 2011 letter, we recorded charges in 2007 and 2008 to establish reserves
relating to the anticipated acquisition of land from South Edge. The charges we recorded in 2007
resulted from the expected losses arising from the purchase price we believed KB HOME Nevada Inc.
would pay for the land, taking into account a decline in market prices for land and housing in
southern Nevada. The charges we recorded in 2008 reflected changed facts and circumstances
surrounding South Edge at the time, including the financial difficulties of two
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">original South Edge members, South Edge&#146;s loan default and prevailing local market conditions with
respect to land values. The balance of these reserves relating to South Edge totaled approximately
$122&nbsp;million at November&nbsp;30, 2010. As noted in our March&nbsp;8, 2011 letter, our having a potential
obligation in respect of the Springing Guaranty was one of multiple factors taken into account in
evaluating this reserve balance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In view of the February&nbsp;3, 2011 court decision, we determined that our obligation in respect of the
Springing Guaranty was probable, and, as described above, we reflected an estimated payment amount
of $211.8&nbsp;million in our consolidated financial statements as of February&nbsp;28, 2011. We determined
the corresponding loss on loan guaranty for the quarter ended February&nbsp;28, 2011 by applying $113.8
million of the approximately $122&nbsp;million reserve balance relating to South Edge (the remaining
reserve balance was utilized for other net liabilities related to South Edge), and factoring in the
offsetting impact of the $75.2&nbsp;million estimated fair value of the South Edge land expected to be
acquired. This resulted in the $22.8&nbsp;million loss on loan guaranty we recorded in the quarter
ended February&nbsp;28, 2011.
</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 response to our prior comment two. Based on your response and disclosures
related to your determination of the estimated fair value of the South Edge land, please
address the following supplementally and in future filings:</B></TD>
</TR>

</TABLE>
</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>(A)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Better explain how and why the number of acres of land you based your fair value
estimate on increased approximately 30% from November&nbsp;30, 2010 to February&nbsp;28, 2011;</B></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>(B)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Quantify and discuss the appreciation factors you used to estimate fair value;</B></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>(C)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Provide an estimate of the fair value of the land, as is, based on current market
conditions; and</B></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>(D)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Address the financial ability of the other parties subject to the joint venture to
fulfill their obligations, including if you believe it is reasonably possible that your
probable obligation could increase if they are unable to fulfill their obligations.</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">For clearer presentation, we have formatted our response with lettered paragraphs and have
substituted in the above comment corresponding letters for the bullet points in the May&nbsp;12, 2011
letter.
</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">(A)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Increase in South Edge Land Acreage</U>. As discussed in our April&nbsp;20, 2011 letter, the
disposition of the South Edge assets through a bankruptcy court process is anticipated to be
lengthy, involve multiple constituencies with various interests, and require the collaboration
of multiple parties. Ongoing discussions since the February&nbsp;3, 2011 court decision with
certain of the other South Edge members and their respective parent companies and the
administrative agent for the lenders to South Edge continue to evolve, and it is uncertain
when a final resolution may be reached and what form it will take &#151; including as to the
developable acres of South Edge land that we may ultimately acquire. As of November&nbsp;30, 2010,
we assumed that we would acquire the 458 developable acres of South Edge land that was
initially allocated to us in the relevant joint venture documents. Based on the
aforementioned discussions that occurred in February&nbsp;2011, we determined that it was probable
that a Supported Plan would have to address the entirety of the debt owed by South Edge and
all of the South Edge assets, including the respective shares of the debt and assets initially
allocated to the two original South Edge members that declared bankruptcy or were adjudicated
bankrupt in 2008. Therefore, we determined that it was probable that, as part of a Supported
Plan, we would acquire an additional 103 developable acres, principally representing a portion
of the South Edge land that had initially been allocated to the two original South Edge
members that declared bankruptcy or were adjudicated bankrupt in 2008. Also, we believed it
was probable that we would realize 31 additional developable acres of South Edge land pursuant
to a revised</TD>
</TR>

</TABLE>
</DIV>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>development plan for the South Edge project. As a result, we assumed as of February&nbsp;28, 2011
that it was probable that we would acquire a total of 592 developable acres of South Edge land.
Until a final resolution of the matter is reached, we will continue to update our estimate of
the developable acres of South Edge land that we ultimately expect to acquire.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">(B)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Appreciation Factors Used to Estimate Fair Value</U>. As described in our March&nbsp;29, 2011
and April&nbsp;20, 2011 letters, the estimated fair value of our share of the South Edge land
expected to be acquired was calculated using a present value methodology that was based on,
among other things, assumptions and judgments related to estimates of average selling prices,
estimates of potential future home sales and cancellation rates, and anticipated land
development, construction and overhead costs. This methodology also incorporated anticipated
appreciation in revenues and costs over the expected 15&nbsp;year life of the South Edge project.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As to revenues, we applied an annual appreciation factor of 5% to the average selling prices for
our homes at the South Edge project for the quarter ended February&nbsp;28, 2011 to estimate the
average selling prices of homes expected to be sold during the relevant 15&nbsp;year period. In
determining this appreciation factor, we considered the following five items:</TD>
</TR>

</TABLE>
</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">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>since we entered the southern Nevada market in 1993 and through 2010, the average
selling price for new homes in this market increased 3.5% on a compounded annual basis,
with a compounded annual increase of 8.4% from 1993 through 2006. Our assumption at
February&nbsp;28, 2011 was that average selling prices in the southern Nevada market will
increase within the range of these historical trends (<I>i.e.</I>, not as much as the 8.4% annual
rate, but greater than the 3.5% annual rate);</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">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in conjunction with the severe deterioration in market conditions experienced since
2006 (the year in which sales prices peaked), average selling prices have dropped
significantly in the southern Nevada market. We believe this is primarily attributable to
an oversupply of homes available for sale due to foreclosures, the local economic and
employment environment, and other factors. As this oversupply is expected to diminish over
time, our assumption at February&nbsp;28, 2011 was that average selling prices in the southern
Nevada market will rebound from presently depressed levels;</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">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>based on our recent sales experience at two communities located near South Edge, we
consider recent average selling prices of homes at the South Edge project to be depressed
relative to the southern Nevada market. We believe this is due to clouded consumer
perceptions about the South Edge project generated from recent negative media coverage
about the project. Our assumption at February&nbsp;28, 2011 was that this negative impact will
be alleviated when the bankruptcy process and other legal matters involving South Edge are
resolved;</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">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the southern Nevada market is land-constrained with respect to residential development,
with nearly all of the surrounding land under the control of the federal Bureau of Land
Management. Given this circumstance, and with the South Edge project considered a premium
master planned development, our assumption at February&nbsp;28, 2011 was that the average
selling prices of homes at the South Edge project will increase at a rate greater than that
for homes in the southern Nevada market over the life of the project; 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">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if we or any other builder or developer acquire the South Edge land that we expect to
acquire, our assumption at February&nbsp;28, 2011 was that it would be possible to effectively
manage home sales and pricing strategies to maximize revenues and profits while remaining
competitive against housing alternatives in the southern Nevada market due in part to the factors
discussed in (iii)&nbsp;and (iv)&nbsp;above.</TD>
</TR>

</TABLE>
</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As to costs, which include amounts required to develop the land, build homes, and cover overhead
(<I>e.g.</I>, closing costs, warranty, sales commissions, and general project management costs), the</TD>
</TR>

</TABLE>
</DIV>
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<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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>following appreciation considerations were applied to the cost estimates at February&nbsp;28, 2011
for the South Edge project:</TD>
</TR>

</TABLE>
</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">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a 10% factor was added to the cost estimates for development work expected to be
completed over the life of the South Edge project, reflecting the potential cost increases
and other uncertainties inherent in estimating development costs of a project of the scale
of South Edge;</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">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an annual appreciation factor of 1% was applied to home construction costs to reflect
anticipated inflation of such costs, taking into account historical trends and current
market conditions. Home construction work (including the purchase of building materials)
is typically performed by subcontractors. Based on our experience in the southern Nevada
market, home construction costs have remained level or declined since 2008. Given the
relatively low level of work available in the local market and significant competition
among subcontractors, our assumptions at February&nbsp;28, 2011 were that home construction
costs are not expected to increase significantly over the life of the South Edge project
and that the rate of any such increase will be below the anticipated rate of increase in
the average selling prices of homes at the South Edge project over the same period; 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">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>overhead costs expected to be incurred in connection with the sale of each home at the
South Edge project were included in our appreciation projections as a function of revenues.
Therefore, these cost estimates were impacted by the 5% annual appreciation factor that we
applied to the average selling prices for our homes at the South Edge
project.</TD>
</TR>

</TABLE>
</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The above-described appreciation factors that we applied at February&nbsp;28, 2011 to estimate the
fair value of our share of the South Edge land expected to be acquired were determined using
judgment and assumptions believed to be appropriate based on the information known to us at the
time. We will continue to review and update as appropriate the appreciation factors used in
calculating our fair value estimates of the South Edge land that we expect to acquire to reflect
changes in relevant market conditions and other applicable factors.</TD>
</TR>

</TABLE>
</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">(C)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Estimated Fair Value of South Edge Land</U>. As reported in the Form 10-Q, the estimated
fair value of the South Edge land expected to be acquired was $75.2&nbsp;million at February&nbsp;28,
2011. Consistent with our fair value estimate of the South Edge land at February&nbsp;28, 2011, we
will continue to perform fair value measurements (and disclose in our future filings the
estimated fair value determined) based on the price that would be received if the South Edge
land were to be sold in its then-current state in an orderly (not a forced) transaction under
the market conditions prevailing as of the applicable reporting date. As discussed in our
April&nbsp;20, 2011 letter, important factors affecting the value of the South Edge land include
the progress in resolving and concluding the bankruptcy process to which the land is now
subject, and the probable development plan and related entitlements that condition the
permissible use of the land. We will continue to update our fair value estimates of the South
Edge land that we expect to acquire as changes in these and other factors occur over time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

    <TD width="2%" nowrap align="left">(D)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Financial Ability of South Edge Members</U>. Based on the information known to us as of
the date of this letter, we believe that the other South Edge members (and their respective
parent companies) that remain involved in South Edge are sufficiently financially sound to be
able to fulfill their respective obligations. In addition, because the Springing Guaranty is
a partial several repayment guarantee of the Loans, we believe it is not reasonably possible
that our probable obligation in respect of the Springing Guaranty could increase if any of
those other South Edge members (or their respective parent companies) are unable to fulfill
their respective obligations in respect of the similar partial several repayment guarantees
that each provided to the administrative agent for the lenders to South Edge. Depending on
the circumstances, however, if a South Edge member or its parent company is unable to fulfill
its respective obligations, we could voluntarily choose to assume</TD>
</TR>

</TABLE>
 </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">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a portion or all of any such obligations and would expect to receive in return a greater share
of South Edge assets, including land.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We will provide disclosure that addresses these matters in our future filings as relevant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Form&nbsp;10-Q for the quarterly period ended February&nbsp;28, 2011</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Note 5. Receivables, page 11</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 toward future disclosure, please tell us the estimated fair value of the real
estate that is subject to the pending foreclosure, as well as the amount and timing of any
valuation allowances you recorded related to the outstanding note receivable.</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">The foreclosure of the real estate securing the note receivable was completed on April&nbsp;13, 2011.
Therefore, the note receivable is no longer outstanding. We are currently determining the
estimated fair value of the real estate we acquired through the foreclosure. When this process is
completed, we will record the real estate in our consolidated financial statements at fair value in
inventory, and it will be subject to our quarterly inventory assessment process. If we identify
any impairment to the real estate, we will include appropriate disclosures in our future filings.
Based on our evaluations during the time the note receivable was outstanding, we did not identify
any impairments and therefore did not record a valuation allowance on the note receivable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Note 7. Inventory Impairment and Land Option Contract Abandonment, page 12</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>With a view toward future disclosure, please provide us with a more specific and
comprehensive discussion regarding how you considered current market conditions in your
impairment analysis. In this regard, please tell us what consideration you gave to your
declining sales, including declines when compared to the third and fourth quarters of fiscal
2010, declining backlog, and increasing cancellation rates. Please address over what time
period you expect to be able to fully realize your current inventory balance.</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">As noted in our March&nbsp;8, 2011 letter, on a quarterly basis, we assess the overall carrying value of
long-lived assets such as inventory and investments in joint ventures. These assessments take into
account, in a comprehensive manner and in accordance with generally accepted accounting principles,
several factors that are specific to each such asset based on the information known to us at the
time the assessments are made, including then-current conditions and trends in the market in which
an asset is located. These quarterly assessments follow a process that is consistently applied and
that is designed to ensure that impairment charges, if any, are identified and recorded in a timely
manner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consistent with our quarterly process, our inventory assessments for the 2011 first quarter
considered recent trends in our sales, backlog and cancellation rates at each of our communities
and relevant land parcels. In those assessments, we determined that the declines in our sales and
backlog levels (which reflect cancellations) that we experienced in the third and fourth quarters
of 2010 did not reflect a long-term change in market conditions preventing recoverability. Rather,
we determined that they reflected primarily the temporary and significant effect of the April&nbsp;30,
2010 expiration of the federal homebuyer tax credit. The expiration of the federal homebuyer tax
credit pulled forward demand into the first quarter and part of the second quarter of 2010, and led
to sharp declines in demand during the second half of 2010 and into 2011. Also contributing to the
declines in our sales and backlog levels in the second half of 2010 were actions we took in
previous years to reduce the number of communities at which we sell homes, primarily by exiting
underperforming markets and operating fewer communities in weaker markets. These actions
</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">were designed, among other things, to help us conserve cash and strengthen our balance sheet and to
support investments in relatively stronger markets for future growth and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition to the above-described factors, our 2011 first quarter inventory assessments also
considered our expectations that our sales and backlog levels will improve in the second half of
2011 on a year-over-year basis. These expectations are based on our experience that market
conditions have been generally stable in 2010 and into 2011, with no significant deterioration or
improvement identified, once the distortive impact of the expiration of the federal homebuyer tax
credit is taken into account. These expectations are also based on our plans to increase the
number of communities at which we sell homes during 2011. Our 2011 first quarter inventory
assessments therefore considered that the anticipated positive comparisons in the second half of
2011 should lead to flat or slightly favorable year-over-year sales results for the full year and
comparatively flat or slightly higher backlog levels entering 2012.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Due to the relatively stable market conditions that we have experienced and our expectations as to
sales and backlog levels for the second half of 2011, and given the inherent challenges and
uncertainties in forecasting future results, our 2011 first quarter inventory assessments assumed
the continuation of current market conditions. Subject to our identifying new information
suggesting a sustained deterioration in market conditions or other significant negative factors, we
anticipate that for most of our assets in inventory where impairment indicators are identified, our
quarterly inventory assessments in 2011 will anticipate sales rates and average selling prices to
generally continue at then-current levels through an affected asset&#146;s estimated remaining life.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of February&nbsp;28, 2011, we had $1.77&nbsp;billion in inventory, consisting of approximately 37,000 lots
owned or controlled. The estimated remaining life of each community and land parcel in our
inventory depends on various factors, such as the total number of lots remaining to deliver homes;
the expected timeline to acquire and entitle land and develop lots to build homes; the anticipated
future sales and cancellation rates; and the timeline to build and deliver homes sold. While it is
difficult to determine a precise timeframe for any particular inventory asset, we estimate our
inventory assets&#146; operating lives under current and expected future market conditions to range
generally from one year to in excess of 10&nbsp;years. Based on current market conditions and expected
delivery timelines, we expect to realize, on an overall basis, the majority of our current
inventory balance within three to five years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Note 15. Legal Matters, page 23</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>With a view toward future disclosure, please tell us your share of the damages related to the
separate arbitration commenced in May&nbsp;2009, as well as the amount and timing of any accrual
you recorded.</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">If the appeals of the arbitration panel&#146;s July&nbsp;6, 2010 decision ultimately are not successful, we
have estimated that our probable maximum share of the $36.8&nbsp;million awarded as damages to the
claimant in the arbitration is approximately $25.5&nbsp;million. This estimate is based on KB HOME
Nevada Inc.&#146;s interest in South Edge in relation to that of the other four respondents in the
arbitration and our assumption that liability for the awarded amount would be joint and several
among the five respondents. Therefore, we have since the third quarter of 2010 segregated an
accrual for $25.5&nbsp;million for this matter from our previously established reserve balances relating
to South Edge. The ultimate amount of our share, however, could be subject to negotiations and/or
potential arbitration among all of the respondents in the arbitration.
</DIV>







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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations,
page 32</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>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>In future filings, to the extent that homes sold include inventory for which you recognized
valuation adjustments in prior periods and the corresponding revenues recognized exceeded your
estimates when determining such valuation adjustments, please provide investors with a
discussion and analysis regarding the favorable impact to gross profits, including
corresponding amounts. Please refer to Items </B><B>303(a)(3)(i)</B><B> and (ii)&nbsp;of Regulation&nbsp;S-K for
guidance.</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 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>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>With a view toward future disclosure, please provide us additional information regarding the
amount of, as well as the facts and circumstances related to, the recent legal settlement
disclosed on page 33.</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">The total settlement amount was $7.1&nbsp;million, including settlement administration costs. The
matter involved a consumer class action lawsuit, initially filed in April&nbsp;2008 in California State
Superior Court (<I>Angela Bates vs. KB Home and Homesafe Escrow Company (Case No.&nbsp;RG-08-384954</I>)). The
lawsuit claimed that one of our subsidiaries violated California law in its performance of certain
contract coordination services between 2003 and 2009. The contract coordination services at issue
are no longer being performed. Trial was scheduled for February&nbsp;14, 2011 and a settlement was
reached on February&nbsp;1, 2011 in a mediation. Though the settlement was of some significance among
the items impacting our results of operations in the quarter ended February&nbsp;28, 2011, the
additional information provided here was not considered material to investors.
</DIV>


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

<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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">/S/ JEFF J. KAMINSKI
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Jeff J. Kaminski<BR>
Executive Vice President and Chief Financial Officer

</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">cc:</TD>
    <TD width="1%">&nbsp;</TD>
    <TD> Tricia Armelin, Staff Accountant<br>
Anne McConnell, Senior Staff Accountant<br>
(U.S. Securities and Exchange Commission)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&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>


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