KB HOME AMENDS RIGHTS PLAN AND ADOPTS SUCCESSOR RIGHTS PLAN TO PRESERVE THE LONG-TERM VALUE OF ITS NET DEFERRED TAX ASSETS

KB Home (NYSE:KBH) announced today that its board of directors adopted an amendment to its stockholder rights plan and a successor rights plan that are intended to preserve the long-term value of the Company’s net deferred tax assets. KB Home has net deferred tax assets of approximately $880 million that it believes could be used to potentially offset the income tax expense on approximately $2.2 billion of future taxable income for a 20-year period.

KB Home’s ability to use its net deferred tax assets could be substantially reduced in the event of an “ownership change” under Section 382 of the Internal Revenue Code. An “ownership change” would occur if stockholders that own (or are deemed to own) at least 5% or more of KB Home’s outstanding stock increase their cumulative ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.

The amendment is intended to reduce the likelihood of an “ownership change” by reducing the ownership threshold for exercising the rights issued under the stockholder rights plan from 15% to 4.9% of the outstanding common stock. The successor rights plan has substantially similar terms and will take effect when the rights under the existing plan expire on March 5, 2009. The Company intends to seek stockholder approval of the successor rights plan, which will expire on March 5, 2010 if not approved by stockholders before that date.

“After careful consideration, our board of directors has determined that it is in the best interests of the Company and our stockholders to modify our stockholder rights plan at this time, and to extend its protection of our net deferred tax assets by adopting a successor rights plan,” said Jeffrey Mezger, president and chief executive officer.

“Our net deferred tax assets represent a substantial potential benefit that can be realized as future income is generated. We are taking this step to preserve the long-term value of our net deferred tax assets.”

Additional information regarding the board of director’s actions will be provided in a Current Report on Form 8-K and in Registration Statements on Form 8-A that KB Home will file with the Securities and Exchange Commission. Those filings will be available on KB Home’s investor relations website and on the SEC’s website at www.sec.gov.