This report does not constitute a rating action. Overview Key strengths Key risks Low leverage relative to its history. Margins likely to recede modestly but remain strong as it offers incentives and cedes pricing power amid housing affordability challenges. Build-to-order business model allows costs to vary with revenues and thus limits risk. Uncertainty regarding the impact of the new administration?s policies on tariffs and the increased probability of recession. Lack of geographic diversification As consumers cope with affordability concerns and uncertainties around macroeconomic events, the spring selling season has been softer than previous years. In addition, KB Home (KBH) delivered fewer homes than expected in its first quarter and consequently lowered its revenue guidance for the year. Furthermore, the company
