What KB Home told the SEC could break it.

Outside of land, KB Home's principal production raw materials are concrete and forest products (lumber), with drywall, plumbing and electrical items also primary inputs, all sourced from third parties. Since 2021 it has experienced rising construction costs particularly for building materials and trade-partner rates, and it only partly mitigates this by entering fixed-price contracts with larger trade partners and material suppliers for limited periods — leaving margins exposed to volatile building-material prices.

“Outside of land, the principal raw materials used in our production process are concrete and forest products. Other primary materials used in home construction include drywall, and plumbing and electrical items.”

KB Home self-performs no land development or home construction; it relies entirely on a network of locally-based independent contractors (and their subcontractors) to build all of its homes, who also supply some building materials. This makes the company dependent on the availability, capacity and performance of trade labor — construction-services shortages and limited supply of specially trained/certified contractors have delayed builds and raised costs, and poor contractor performance can cause cost increases and home-sale cancellations.

“We, or outside general contractors we may engage, contract with a variety of independent contractors, who are typically locally based, to perform all land development and home construction work through these independent contractors’ own employees or subcontractors. We do not self-perform any land development or home construction work.”

KB Home's homebuilding supply chain is directly exposed to U.S. and retaliatory foreign tariffs, duties, sanctions and trade restrictions on imported construction materials. In 2025 its supply chain faced cost pressures and constrained availability of several home-construction items tied to tariffs on steel, aluminum and lumber (alongside permitting/utility delays). The company warns these upward cost trends may continue into 2026 and that escalating or expanding tariff actions could cause significant construction cost increases and supply-chain disruptions, though it had not yet seen significant direct cost increases as of the filing date.

“In 2025, our supply chain faced cost pressures and constrained availability of several home construction items due to varying tariffs, duties, sanctions and/or trade restrictions the federal government and other countries (sometimes in retaliation) imposed on materials, parts and goods imported into the U.S., including steel, aluminum and lumber, and we experienced continued significant delays with respect to state and municipal construction permitting, inspections and utility processes.”