Our rating on KB Home reflects our expectation that this Los Angeles-based homebuilder's bottom line will remain under pressure through 2011, given the unsteady overall housing market recovery, KB Home's weaker new orders, and the company's substantial overhead costs. Our ratings also continue to reflect risks associated with the company's highly leveraged financial profile. However, we acknowledge that operating losses have narrowed significantly due to lower impairment charges. KB Home is one of the nation's largest homebuilders, having delivered nearly 8,400 new homes during the 12 months ended May 31, 2010, at an estimated average price of about $203,000. The company operates in 30 metropolitan areas in California and the southwestern and southeastern U.S. Many of these markets were among
