UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 11-K

þ		ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-09195

KB HOME 401(k) SAVINGS PLAN

(Full title of the plan)

(Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office)

 

 

Financial Statements and Supplemental Schedule
KB Home 401(k) Savings Plan
Years ended December 31, 2010 and 2009

KB Home 401(k) Savings Plan

Financial Statements and Supplemental Schedule

Years ended December 31, 2010 and 2009

Contents

Report of Independent Registered Public Accounting Firm			1
Audited Financial Statements
Statements of Net Assets Available for Benefits as of December 31, 2010 and 2009			2
Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2010 and 2009			3
Notes to Financial Statements			4
Supplemental Schedule
Schedule H, Line 4(i) — Schedule of Assets (Held at End of Year)			14
Exhibit 23.1

Report of Independent Registered Public Accounting Firm

The Administrative Committee, as Plan Administrator
of the KB Home 401(k) Savings Plan

We have audited the accompanying statements of net assets available for benefits of the KB Home 401(k) Savings Plan (the Plan) as of December 31, 2010 and 2009, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2010 and 2009, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2010, is presented for purposes of additional analysis and is not a required part of the financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

/s/ Ernst & Young LLP

Los Angeles, California
June 29, 2011

KB Home 401(k) Savings Plan

Statements of Net Assets Available for Benefits

		December 31,
		2010				2009
Assets
Investments, at fair value		$	120,528,737			$	114,001,163
Receivables:
Notes receivable from participants			3,605,790				3,388,765
Participant contributions			397				428
Employer contributions			20,928				—
Other			56				73
Total assets			124,155,908				117,390,429
Liabilities
Administrative expenses payable			2,521				2,521
Total liabilities			2,521				2,521
Net assets available for benefits		$	124,153,387			$	117,387,908

See accompanying notes to financial statements.

KB Home 401(k) Savings Plan

Statements of Changes in Net Assets Available for Benefits

		Years ended December 31,
		2010				2009
Additions (Deductions)
Contributions:
Plan participants		$	6,560,002			$	6,628,963
Employer, net of forfeitures			3,584,344				3,506,831
			10,144,346				10,135,794
Investment income:
Interest and dividends			3,593,804				1,734,636
Net appreciation in fair value of investments			11,755,329				20,824,706
			15,349,133				22,559,342
Interest on notes receivable from participants			183,493				214,380
Benefits paid to participants			(18,880,552	)			(21,362,983	)
Administrative expenses			(30,941	)			(53,358	)
Net increase in net assets available for benefits			6,765,479				11,493,175
Net assets available for benefits
Beginning of year			117,387,908				105,894,733
End of year		$	124,153,387			$	117,387,908

See accompanying notes to financial statements.

KB Home 401(k) Savings Plan

Notes to Financial Statements

1.

Description of the Plan

General

The following description of the KB Home 401(k) Savings Plan (the Plan) provides only general information. Eligible employees of KB Home (the Company) who elect to participate in the Plan (each, a Participant) should refer to the governing Plan document for a more complete description of the Plan’s provisions.

The Plan is a defined contribution plan in which all eligible employees of the Company may participate beginning on the first day of the month following their date of hire. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

Contributions

Participants may contribute to the Plan up to 25% of their annual eligible compensation on a pretax basis. Participants may also contribute up to an additional 15% of their annual eligible compensation on an after-tax basis. All contributions are made in whole percentages through payroll deductions. Pretax contributions are eligible for tax deferred treatment up to the limits provided by the Internal Revenue Code (the Code).

Each Participant whose designated per payroll period contribution rate is at least 6%, who has attained (or will attain) age 50 before the close of a Plan year and whose contributions for the Plan year will exceed the limits of Code Section 402(g) or other Plan limit, is eligible to make a catch-up contribution in accordance with, and subject to the limitations of, Code Section 414(v).

Unless otherwise determined by its Board of Directors, the Company will match a Participant’s pretax contribution up to 6% of annual eligible compensation (for Participants paid on a commission basis, the Company will match pretax contributions only up to $50,000 of eligible compensation).

The Plan accepts rollover contributions transferred from other qualified retirement plans or from individual retirement accounts, subject to the applicable provisions of the Plan.

Plan assets are held in trust by Fidelity Management Trust Company, Inc. (the Trustee). Participants may direct the investment of their contributions among one or more of the several fund options offered by the Plan, and may elect to change the investment of their contributions or to transfer all or part of their individual Plan account balances among such fund options.

KB Home 401(k) Savings Plan

Notes to Financial Statements

1.

Description of the Plan (continued)

Vesting

Participants are immediately vested in their contributions and the earnings thereon. Subject to applicable Internal Revenue Service (IRS) rules and regulations, Company matching contributions and the earnings thereon vest to Participants over five years.

Notes Receivable from Participants

Subject to the provisions of the Plan, a Participant may borrow up to 50% of the vested balance in the Participant’s Plan account not to exceed $50,000 in any one year period. The minimum amount of any such loan is $1,000. Loans must be repaid within five years unless a loan is used to purchase a Participant’s principal residence, in which case, the loan must be repaid within 15 years. The loans are secured by the vested balance in the borrowing Participant’s Plan account and bear interest at the prime rate plus 1%, as of the last day of the preceding calendar quarter in which a loan was made.

Distributions and Withdrawals

Participants who terminate their employment with the Company may elect to withdraw or rollover their contributions, vested Company matching contributions, and related earnings thereon. Withdrawals or rollovers (to a separate defined contribution plan or to an individual retirement account) may be processed without a formerly employed Participant’s consent if the Participant’s vested Plan account balance totals less than $5,000. Vested Plan account balances totaling $1,000 or less will be distributed as a lump-sum payment, and vested Plan account balances totaling more than $1,000, but less than $5,000 will be rolled into an individual retirement account. Vested Plan account balances totaling $5,000 or more may be kept in the Plan. Participants may take hardship withdrawals from their Plan account balances subject to the limitations and requirements of the Plan.

Forfeitures

Unvested Company contributions for formerly employed Participants are forfeited and used by the Company in the following order: a) to restore the employer match and profit-sharing subaccounts of former Participants, if any; b) to reduce matching contributions for the Plan year and shall be allocated to the Participants’ employer match subaccounts in the same manner as matching contributions are allocated for the Plan year; c) to add to the profit-sharing contributions for the Plan year, if any; and d) to pay expenses of the Plan. For the Plan years ended December 31, 2010 and 2009, the Company used $380,135 and $392,037, respectively, of forfeitures to offset matching contributions. The forfeiture balances available to offset future matching contributions were $379,958 and $196,461 at December 31, 2010 and 2009, respectively.

KB Home 401(k) Savings Plan

Notes to Financial Statements

1.

Description of the Plan (continued)

Administrative Expenses

Certain administrative expenses of the Plan, such as recordkeeping fees, are paid directly by the Company. Other administrative expenses arising from Participants’ individual investment elections or transactions under the Plan, such as from the administration of Participant loans, Plan account withdrawals, and the administration of the unitized employer stock fund in the Plan (the KB Home Stock Fund), are paid directly by such Participants.

Plan Termination

As of the date of this report, the Company expects and intends to continue the Plan, but it reserves the right to amend, suspend or terminate the Plan (in whole or in part) at any time. In the event of Plan termination, the Plan account balances of the individuals who are Participants at that time, if not already so, shall become 100% vested and not subject to forfeiture.

2.

Summary of Significant Accounting Policies

Basis of Accounting

The financial statements of the Plan are prepared on the accrual basis of accounting.

The financial statements are based on information provided to Plan management by the Trustee. Certain adjustments have been made to the information provided by the Trustee in order for the financial statements to conform to the accrual basis of accounting and U.S. generally accepted accounting principles (GAAP).

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires Plan management to make estimates and assumptions that could affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Investment Valuation and Income Recognition

Investments held by the Plan are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Refer to Note 3 below for the fair value measurement disclosures associated with the investments held by the Plan.

KB Home 401(k) Savings Plan

Notes to Financial Statements

2.

Summary of Significant Accounting Policies (continued)

IFRSs (ASU 2011-04). ASU 2011-04 amended Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (ASC 820) to converge the fair value measurement guidance in GAAP and International Financial Reporting Standards. Some of the amendments clarify the application of existing fair value measurement and disclosure requirements, while other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. In addition, ASU 2011-04 requires additional fair value disclosures. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Plan management is currently evaluating the effect that the provisions of ASU 2011-04 will have on the Plan’s financial statements.

Reclassifications

Certain prior year amounts in the statements of net assets available for benefits and in the statements of changes in net assets available for benefits have been reclassified to conform to the current year presentation.

3.

Fair Value Measurements

ASC 820 provides a framework for measuring the fair value of assets and liabilities under GAAP, and establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:

Level 1		Fair value determined based on quoted prices in active markets for identical assets or liabilities.
Level 2		Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.
Level 3		Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

The following table presents the Plan’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of December 31, 2010:

KB Home 401(k) Savings Plan

Notes to Financial Statements

3.

Fair Value Measurements (continued)

		Fair Value Measurements Using
						Significant
		Quoted Prices				Other				Significant
		in Active				Observable				Unobservable
		Markets				Inputs				Inputs
		(Level 1)				(Level 2)				(Level 3)				Total
Money market fund		$	15,973,467			$	—			$	—			$	15,973,467
Mutual funds:
Domestic stock funds			60,532,897				—				—				60,532,897
International stock funds			11,344,098				—				—				11,344,098
Bond funds			9,345,077				—				—				9,345,077
Balanced funds			16,644,481				—				—				16,644,481
KB Home Stock Fund:
KB Home Common Stock			6,324,719				—				—				6,324,719
Cash-interest bearing			—				363,998				—				363,998
Total investments measured at fair value		$	120,164,739			$	363,998			$	—			$	120,528,737

The following table presents the Plan’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of December 31, 2009:

		Fair Value Measurements Using
						Significant
		Quoted Prices				Other				Significant
		in Active				Observable				Unobservable
		Markets				Inputs				Inputs
		(Level 1)				(Level 2)				(Level 3)				Total
Money market fund		$	17,965,730			$	—			$	—			$	17,965,730
Mutual funds:
Domestic stock funds			55,730,269				—				—				55,730,269
International stock funds			10,469,765				—				—				10,469,765
Bond funds			8,790,787				—				—				8,790,787
Balanced funds			14,132,884				—				—				14,132,884
KB Home Stock Fund:
KB Home Common Stock			6,531,297				—				—				6,531,297
Cash-interest bearing			—				380,431				—				380,431
Total investments measured at fair value		$	113,620,732			$	380,431			$	—			$	114,001,163

KB Home 401(k) Savings Plan

Notes to Financial Statements

3.

Fair Value Measurements (continued)

The fair values of money market funds and mutual funds are determined based on quoted market prices. The fair value of the KB Home Stock Fund is determined by the Trustee based on the combined fair value of the fund’s underlying common stock and cash positions. The fair value of the fund’s underlying common stock position is based on quoted market prices. The fair value of the fund’s underlying cash position is valued at its carrying value, which approximates market value.

4.

Investments

The following table presents the fair value of the individual investments held by the Plan that represent 5% or more of the Plan’s net assets as of December 31, 2010 and 2009:

		December 31,
		2010				2009
Fidelity Contrafund		$	14,741,588			$	13,730,567
Fidelity Equity Income			6,374,518				5,999,877
Fidelity Intermediate Bond			8,152,501				8,450,044
Fidelity Low-Priced Stock			8,137,348				6,833,658
Fidelity Magellan			8,805,311				8,646,045
Fidelity Retirement Money Market			15,973,467				17,965,730
KB Home Stock Fund:
KB Home Common Stock			6,324,719				6,531,297

The following table presents the net appreciation of the investments held by the Plan (including investments bought, sold, and held during the year) for the Plan years ended December 31, 2010 and 2009:

		Years ended December 31,
		2010				2009
Mutual funds		$	11,644,490			$	20,644,165
KB Home Stock Fund			110,839				180,541
Total		$	11,755,329			$	20,824,706

KB Home 401(k) Savings Plan

Notes to Financial Statements

5.

Risks and Uncertainties

The Plan’s concentrations of credit and market risk are dictated by its terms, as well as by ERISA, and the investments directed by individual Participants in various mutual funds and other securities. These investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect Participants’ individual Plan account balances, the amounts reported in the statements of net assets available for benefits of the Plan, and the amounts reported in the statements of changes in net assets available for benefits of the Plan.

6.

Tax Status of the Plan

The Plan has received a determination letter from the IRS dated January 23, 2009 stating that the Plan is qualified under Code Section 401(a) and, therefore, the related trust is exempt from taxation. The Plan is required to operate in conformity with the Code to maintain its qualification. Plan management believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. Subsequent to receiving the IRS determination letter dated January 23, 2009, the Plan adopted proposed amendments previously submitted to the IRS.

GAAP requires Plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. Plan management has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2010, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Plan management believes the Plan is no longer subject to income tax examinations for years prior to 2007.

7.

Related Party and Party-in-Interest Transactions

Investments held by the Plan include shares of mutual funds managed by an affiliate of the Trustee. The Trustee acts as a trustee for only those investments held by the Plan. An investment held by the Plan also includes the common stock of the Company. The transactions associated with these investments qualify as exempt party-in-interest transactions under ERISA.

KB Home 401(k) Savings Plan

Notes to Financial Statements

8.

Reconciliation to Form 5500

The following table presents a reconciliation of net assets available for benefits per the Plan’s financial statements to the Plan’s Form 5500:

		December 31,
		2010				2009
Net assets available for benefits per the Plan’s financial statements		$	124,153,387			$	117,387,908
Less employer contributions receivable at end of year			(20,636	)			—
Less benefits payable at end of year			—				(45	)
Net assets available for benefits per the Plan’s Form 5500		$	124,132,751			$	117,387,863

The following table presents a reconciliation of Participant contributions per the Plan’s financial statements to the Plan’s Form 5500:

		Years ended December 31,
		2010				2009
Contributions per the Plan’s financial statements		$	10,144,346			$	10,135,794
Add employer contributions receivable at beginning of year			—				288,841
Less employer contributions receivable at end of year			(20,636	)			—
Contributions per the Plan’s Form 5500		$	10,123,710			$	10,424,635

The following table presents a reconciliation of benefits paid to Participants per the Plan’s financial statements to the Plan’s Form 5500:

		Years ended December 31,
		2010				2009
Benefits paid to Participants per the Plan’s financial statements		$	18,880,552			$	21,362,983
Less benefits payable at the beginning of year			(45	)			(118	)
Add benefits payable at end of year			—				45
Benefits paid to Participants per the Plan’s Form 5500		$	18,880,507			$	21,362,910

KB Home 401(k) Savings Plan

Notes to Financial Statements

9.

Subsequent Events

Plan management has evaluated subsequent events in respect of the Plan through the filing of the Plan’s financial statements with the Securities and Exchange Commission and did not identify any events that would require an adjustment to the financial statements or to accompanying disclosures.

Supplemental Schedule

KB Home 401(k) Savings Plan
EIN: 95-3666267 Plan Number: 001
Schedule H, Line 4(i) — Schedule of Assets (Held at End of Year)

December 31, 2010

Identity of Issuer,

Description of Investment Including

Borrower, Lessor,

Maturity Date, Rate of Interest,

Shares/

Current

or Similar Party

Collateral, Par, or Maturity Value

Units

Cost

Value

American Beacon

American Beacon Small Cap Value

150,877.418

**

$

3,002,461

Dimension Capital Management

Dimension US Large Cap Value

71,011.283

**

1,428,747

Fidelity Investments*

Fidelity Asset Manager

295,231.684

**

4,552,473

Fidelity Investments*

Fidelity Consumer Discretionary

14,043.062

**

344,196

Fidelity Investments*

Fidelity Contrafund

217,652.267

**

14,741,588

Fidelity Investments*

Fidelity Equity Income

144,024.353

**

6,374,518

Fidelity Investments*

Fidelity Financial

10,466.054

**

644,604

Fidelity Investments*

Fidelity Freedom Income

27,381.437

**

308,863

Fidelity Investments*

Fidelity Freedom 2000

35,569.465

**

424,699

Fidelity Investments*

Fidelity Freedom 2010

96,667.649

**

1,313,713

Fidelity Investments*

Fidelity Freedom 2020

242,144.421

**

3,339,172

Fidelity Investments*

Fidelity Freedom 2030

241,010.417

**

3,318,713

Fidelity Investments*

Fidelity Freedom 2040

461,387.176

**

3,695,711

Fidelity Investments*

Fidelity Healthcare

14,613.621

**

1,821,003

Fidelity Investments*

Fidelity Industrials

50,697.028

**

1,199,492

Fidelity Investments*

Fidelity Intermediate Bond

772,748.953

**

8,152,501

Fidelity Investments*

Fidelity Low-Priced Stock

212,020.523

**

8,137,348

Fidelity Investments*

Fidelity Magellan

122,859.092

**

8,805,311

Fidelity Investments*

Fidelity Natural Resources

102,593.817

**

3,571,291

Fidelity Investments*

Fidelity Overseas

108,333.416

**

3,518,669

Fidelity Investments*

Fidelity Retirement Money Market

15,973,466.500

**

15,973,467

Fidelity Investments*

Fidelity Technology

18,186.907

**

1,738,850

Fidelity Investments*

Fidelity Utilities Growth

14,920.370

**

721,848

Legg Mason

Legg Mason Partners Aggressive Growth

38,568.324

**

4,276,070

Harbor Funds

Harbor International

41,010.209

**

2,483,168

Managers Investment Group

Managers Fremont Institutional Micro-Cap

45,526.301

**

539,031

Pacific Investment Management Company

PIMCO Total Return Fund Administrative Class

109,914.835

**

1,192,576

Fidelity Investments*

Spartan US Equity Index

64,695.951

**

2,877,676

Franklin Templeton Investments

Templeton Developing Markets A

209,254.259

**

5,342,261

KB Home Common Stock*

KB Home Stock Fund

KB Home Common Stock

468,845.000

**

6,324,719

Fidelity-Cash-interest bearing

363,998.040

**

363,998

Notes receivable from Participants *

Individual notes receivable from Participants with interest rates ranging from 4.25% to 9.25% and maturity dates through 2024

3,605,790

$

124,134,527

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

				Sequentially
Exhibit No.		Description		Numbered Page
23.1		Consent of Independent Registered Public Accounting Firm			17