Andrew Aldion

Andrew Aldion inquired about the current land environment, KB Home's ability to secure new lots for future growth, and its approach to the land-light model. He also requested market-specific insights on demand trends, highlighting any areas with increased competition from resale inventory.

Answer

Jeffrey Mezger, Chairman, President & CEO, noted that land markets are easing, with some price reductions and more favorable terms, allowing the company to abandon deals that no longer meet underwriting criteria. Rob McGibney, President & COO, provided a broad overview of mixed demand, highlighting strength in Inland Empire, Las Vegas, Houston, and Charlotte, while coastal California, Seattle (improving), and Denver were more challenged. He observed stabilization in Florida and Texas despite earlier increases in resale and new home inventory.

Andrew Aldion inquired about the land environment, KB Home's ability to find new lots for future growth, especially given the industry's increasing appetite for a land-light model. He also asked for market-specific callouts on progression, geographies, and any increased competition from resale homes.

Answer

Jeff Mezger, Chairman and Chief Executive Officer, noted that land markets are easing, with some price reductions and better terms available. He mentioned canceling contracts for 6,800 lots that no longer met underwriting criteria, expecting to re-acquire similar assets at better prices and terms. He anticipates a 'friendlier' land market ahead. Rob McGibney, President and Chief Operating Officer, provided a broad overview of demand: strong in Inland Empire, North Bay/Central Valley California, Las Vegas, Houston, and Charlotte; more challenged in higher-priced coastal California, Seattle (though improving), and Denver. He observed increased resale inventory in Florida and Texas, leading to targeted price adjustments and cost reductions, which have resulted in stabilization and improved absorption in those markets.

Andrew Aldion inquired about the land environment, including the ability to find new lots for future growth, especially with the industry's increasing appetite for a land-light model. He also asked for market-specific callouts on how things are progressing and if there's increased competition from resale homes.

Answer

Jeff Mezger, Chairman and Chief Executive Officer, noted that land markets are easing, with some price reductions and more favorable terms, allowing for quicker development. He mentioned canceling contracts for lots that no longer met underwriting criteria, with the expectation of reacquiring them at better prices and terms. Rob McGibney, President and Chief Operating Officer, provided a broad overview of demand, highlighting strong markets like Inland Empire, Las Vegas, Houston, and Charlotte, while coastal California, Seattle (now improving), and Denver were more challenged. He observed increased resale inventory in Florida and Texas, to which the company responded with targeted price adjustments and cost reductions, leading to stabilization and improved absorption.