KB Home FY 2Q17 Earnings Call Notes

Jeff Mezger – Chairman, President and CEO

Extremely low levels of resale inventory

“What remains especially striking is the extremely low levels of resale inventory available. At 4.2 months nationally, and well below that in many our submarkets, resale inventory is insufficient to meet demand. It is one of the key factors underlying pricing power in most of our markets, and we plan to continue maintaining price or pace – sorry – continue maintaining pace while increasing price when appropriate.”

Millenials moving on with their lives

“Certainly there has been employment growth and employment growth creates demand and don’t forget the millennials moving out of the parent’s house. There is a lot of demand being generated right now as millennials move on with their life and get married and dual incomes and all of those things. On the mortgage side, again there was an announcement today out of Fannie on encouraging lenders to loosen up their guidelines a bit. We are seeing little bits around the edges, but no major shifts in the quality of the underwriting.”

June remains good

“Jay, we typically don’t comment within the quarter, because we are so early into it. We did in the first quarter because we do our earnings release half way through the quarters, but we feel we can give you the color I can say in general but the trends remain good just like March, April and May and that’s some specific.”