KB Home (KBH) buys land and builds homes. In 2006, the company sold 32,124 homes across 15 states, largely in the Southwest and Western United States.^[1] The company also builds homes in France, with 15% of its business coming from developments in that country. KBH targets first-time and active buyers, offering single-family detached homes, condominiums, and attached multi-family communities. At an average home selling price of $277,000, the company offers homes that are slightly more expensive than the national median home price of around $210,000.^[2] Through its financing segment, the company also offers buyers mortgage financing on their home purchase.

The company operates in a highly cyclical industry. New home construction, home prices and new home sales volume are heavily dependent upon job growth, interest rates, and the business cycle at large. Low interest rates and high job growth bode well for homebuilding, but as the recent subprime lending crisis and depressed housing market has illustrated, things can sour quickly and the business can be difficult to predict. Key homebuilding numbers, such as housing starts and existing home sales have continued to come in weak of late. Homebuilding is highly competitive and marked by few barriers to entry, low profit margins, and high financial leverage.

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