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of Stockholders

By Order of the Board of Directors,

Charles F. Carroll

Corporate Secretary

Los Angeles, California

March 6, 2006

General Information

Why did I receive this Proxy Statement?

Can I attend the Annual Meeting?

   You are cordially invited to attend the Annual Meeting. Please note, however, that you may be subject to a security check and that no cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. Also, due to space constraints, you may be accompanied by only one guest.

Who is entitled to vote at the Annual Meeting?

   Only holders of record of the 93,180,138 shares of our Common Stock outstanding at the close of business on February 14, 2006 will be entitled to vote at the Annual Meeting. Each holder of our Common Stock is entitled to one vote for each share held. Our Grantor Stock Ownership Trust, established to assist us in meeting certain of our obligations to employees under our employee benefit plans, held 12,981,680 shares of our Common Stock for voting purposes as of February 14, 2006. These shares will be voted by the trustee of the Grantor Stock Ownership Trust in accordance with instructions received from employees who participate in certain of our employee benefit plans. There is no right to cumulative voting.

Who is a “Holder of Record”?

   If your shares of our Common Stock are registered directly in your name with our transfer agent, Mellon Investor Services LLC, you are considered the “holder of record” of those shares. If your shares are held in a stock brokerage account or by a financial institution or other holder of record, you are considered the beneficial owner of those shares held in “street name.”

How do I vote?

   If you are a beneficial owner, you have the right to instruct your broker, financial institution or other holder of record on how to vote your shares by using the voting instruction card you received from them or by following their respective telephone and/or Internet voting instructions.

   If you are a holder of record, you may vote by mail, by telephone or via the Internet, as described below.

   Mail. Please promptly complete and return your Proxy Card in the postage-paid envelope provided.

   Telephone. Please call the 800-number listed on your Proxy Card. Telephone voting procedures have been established to verify your identity, to allow you to provide proxy voting instructions and to confirm that your instructions were accurately recorded. Please have your Proxy Card available when you call.

   Internet. Please visit the Internet web site address listed on your Proxy Card. As with telephone voting, procedures have been established to verify your identity and to confirm your voting instructions. Please have your Proxy Card available when you visit the Internet web site address.

   Telephone and Internet voting will be available to holders of record 24 hours each day until 11:59 p.m. Eastern Daylight Time on April 5, 2006. If you use the 800-number or the Internet to provide your proxy voting instructions, you do not need to mail in your Proxy Card.

   Revoking Your Proxy Vote. If you are a holder of record, you may revoke the proxy voting instructions you make by mail, by telephone or via the Internet at any time prior to the exercise of those instructions at the Annual Meeting by delivering a revocation in writing to us in care of the Corporate Secretary, KB Home, 10990 Wilshire Boulevard, Los Angeles, California 90024.

   If you are a beneficial owner, you may submit new voting instructions by contacting your broker, financial institution or other holder of record. You may also vote in person at the Annual Meeting as described in the next paragraph.

   In Person at the Annual Meeting. Whether you are a holder of record or a beneficial owner you may vote in person at the Annual Meeting, even if you have previously provided proxy voting instructions by mail, by telephone or via the Internet. If you are a holder of record, you may also be represented by another person at the Annual Meeting by executing a proper proxy designating that person. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other holder of record and present it with your ballot to be able to vote in person at the Annual Meeting.

What are the voting requirements to elect the Director nominees and to approve each of the proposals in this Proxy Statement?

   Under the laws of the State of Delaware, where we are incorporated, stockholders may take action at the Annual Meeting by voting their shares as described above, provided a quorum is present. At least a majority of the outstanding shares entitled to vote must be present or represented at the Annual Meeting to establish a quorum. Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of establishing a quorum.

   A “broker non-vote” arises when a broker, financial institution or other holder of record that holds shares in street name does not receive instructions from a beneficial owner and does not have the discretionary authority to vote on a particular item. Per New York Stock Exchange rules, brokers have

discretionary authority to vote on the election of directors and the ratification of the appointment of the independent registered public accounting firm. Brokers do not, however, have discretionary authority to vote on the other two proposals in this Proxy Statement, so broker non-votes will not be considered entitled to vote for either such proposal and will have no effect on the outcome.

   All shares of Common Stock represented by valid proxies received pursuant to this solicitation and not revoked will be voted in accordance with the proxy instructions given.

   Because a proxy confers discretionary authority to vote upon other matters that may properly come before the Annual Meeting, shares represented by valid proxies will be voted in accordance with the judgment of Bruce Karatz, Chairman and Chief Executive Officer, and Charles F. Carroll, Vice President, Deputy General Counsel and Corporate Secretary, who are the persons named as proxies on the Proxy Cards for holders of record, or their duly authorized designees.

   Where no instruction is made on a signed Proxy Card with respect to any item submitted to a vote, such shares will be voted for the election as Directors of the four individuals named under “Election of Directors” on pages 12 – 18 below, for the amendment to our Amended Certificate of Incorporation to decrease the authorized shares of our Common Stock from 300,000,000 shares to 290,000,000 shares discussed on pages 19 – 20 below, for the Amended and Restated KB Home 1999 Incentive Plan discussed on pages 21 – 28 below and for the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending November 30, 2006 discussed on page 29 below.

   Election of Directors. The affirmative vote of a plurality of the votes present or represented at the Annual Meeting is required to elect each Director nominee. Accordingly, the Director nominee with the most votes for a particular board seat will be elected to that seat. You may vote “for” all Director nominees or you may “withhold” your vote with respect to one or more of the Director nominees. Abstentions will not be counted.

   Under our Governance Principles, any Director elected to the Board of Directors at the Annual Meeting in an uncontested election with less than the affirmative vote of a majority of shares present in person or by proxy shall promptly tender his or her resignation to the Chair of the Nominating and Corporate Governance Committee of the Board of Directors (“Nominating Committee”). The Nominating Committee will then promptly evaluate all relevant factors and recommend to the full Board whether to accept the resignation or, if appropriate, to adopt another course of action to remedy the underlying cause(s) of the election result. Subject to any applicable legal or regulatory requirements, the Board shall within 90 days following certification of the stockholder vote decide whether to accept the resignation, reject the resignation or, if appropriate, reject the resignation but adopt measures designed to address the underlying cause(s) of the election result. A full explanation of the Board’s decision will be publicly disclosed in a periodic or current report filed with the Securities and Exchange Commission. A Director who tenders his or her resignation because he or she was elected in an uncontested election with less than a majority of the shares present or represented at an Annual Meeting and any non-independent Director will not participate in these deliberations and decisions.

   Other Proposals in this Proxy Statement. The affirmative vote of a majority of the outstanding shares of our Common Stock is required to approve the amendment to our Amended Certificate of Incorporation to decrease the authorized shares of our Common Stock from 300,000,000

shares to 290,000,000 shares. The affirmative vote of a majority of the shares present or represented at the Annual Meeting and entitled to vote is required both to approve the Amended and Restated KB Home 1999 Incentive Plan and to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending November 30, 2006. You may vote “for,” “against,” or “abstain” with respect to any of these proposals. Abstentions will have the same effect as an “against” vote.

Are the Notice of Annual Meeting, Proxy Statement, the 2005 Annual Report on Form 10-K and the 2005 Annual Report to Stockholders available online?

   Yes. The Notice of Annual Meeting, this Proxy Statement, the 2005 Annual Report on Form 10-K and the 2005 Annual Report to Stockholders may be viewed or downloaded from our website at: http://www.kbhome.com/investor/main.

Who will pay for this proxy solicitation?

   We will pay the entire cost of soliciting proxies. In addition to use of the mail, proxies may be solicited by our officers, Directors and other employees by telephone, facsimile or personal solicitation, and no additional compensation will be paid to such individuals. We will, if requested, reimburse banks, brokerage houses and other custodians, nominees and certain fiduciaries for their reasonable expenses incurred in mailing proxy material to their principals. We have hired Georgeson Shareholder Communications Inc., a professional soliciting organization, to assist in proxy solicitation and in distributing proxy materials to institutions, brokerage houses, custodians, nominees and other fiduciaries. For these services, we will pay Georgeson a fee of $8,500.

Who will count the vote?

   Representatives of our transfer agent, Mellon Investor Services LLC, will count the votes and act as independent inspectors of election.

Corporate Governance and Board Matters

    We believe that sound corporate governance is fundamental to the success of our business and its long-term value for our stockholders. Our Governance Principles, which are included with this Proxy Statement at Attachment A, reflect our core governance values and provide the framework within which we conduct our business and pursue strategic goals. Our Governance Principles are regularly reviewed by the Nominating and Corporate Governance Committee of the Board of Directors, and the full Board approves changes as appropriate.

Ethics Policy

   As part of our commitment to sound governance, we expect all of our employees and Directors to follow the highest ethical standards when representing KB Home and our interests. To this end, all employees, including senior management, and Directors must abide by our Ethics Policy. Our Ethics Policy is reviewed regularly by the Audit and Compliance Committee of the Board of Directors, and the full Board approves changes as appropriate.

Role of the Board

   The Board of Directors is elected by the stockholders to oversee the management of our business and to assure that the long-term interests of our stockholders are being served.

Director Qualifications

   We believe that our Directors should possess the highest personal and professional ethics, integrity, judgment and values, and be committed to representing the long-term interests of our stockholders. Directors should also have an inquisitive and objective perspective, and be able and willing to dedicate the time necessary to Board and Committee service.

   The Nominating and Corporate Governance Committee of the Board of Directors regularly assesses the skills and characteristics of current and potential Directors in view of the perceived needs of the Board at the time an assessment is made and may consider the following attributes, among others:

Director Independence

   We believe that a substantial majority of our Directors should be independent. A Director is deemed to be independent if he or she does not have any direct or indirect material commercial or charitable relationship with us based on all relevant facts and circumstances. The Board of Directors makes independence determinations annually based on information supplied by Directors and other sources, and on the prior review and recommendation of the Nominating and Corporate Governance Committee of the Board of Directors.

   The Board’s Director independence determinations are guided by certain standards which are set forth in our Governance Principles and are consistent with New York Stock Exchange listing standards.

   Based on the Board’s Director independence guidelines, the Board has determined that all currently incumbent Directors and Director nominees are independent, except Mr. Karatz, our Chairman and Chief Executive Officer. In addition, the Board has determined that all Committees of the Board, except the Executive Committee, which does not regularly meet, are entirely composed of independent Directors within the meaning of New York Stock Exchange listing standards and Securities and Exchange Commission rules. The Executive Committee is comprised of Dr. Irani and Mr. Nogales, who are both independent, and Mr. Karatz.

Board Meetings, Membership and Attendance

   The Board held six meetings in our 2005 fiscal year. As of the date of this Proxy Statement, the Board has 11 members.

   All Directors are expected to attend our Annual Meetings. All Directors who were serving at the time attended the 2005 Annual Meeting, which was held on April 7, 2005.

   Each Director attended at least 75% of all Board meetings and of all meetings of the Committees on which he or she served in our 2005 fiscal year, except for Mr. Burkle, who was absent from two Board meetings, two meetings of the Nominating and Corporate Governance Committee and four meetings of the Audit and Compliance Committee.

Board Committees

   In our 2005 fiscal year, the Board had four committees: Audit and Compliance; Management Development and Compensation; Nominating and Corporate Governance and Executive. Each Committee assists the Board in fulfilling its responsibilities, as described below.

   The chart on page 7 shows the various Committees of the Board, the current members of those Committees, and the number of meetings each Committee held during the year.

   Audit and Compliance Committee. The Audit and Compliance Committee represents and assists the Board in fulfilling its responsibilities for oversight of our:

   The Audit and Compliance Committee also oversees the preparation of a required report for inclusion in the annual proxy statement and is charged with the duties and responsibilities listed in its Charter.

   The Board has determined that each current member of the Audit and Compliance Committee is independent under our Governance Principles, New York Stock Exchange listing standards and Securities and Exchange Commission rules. The Board has also determined that each current member of the Audit and Compliance Committee is financially literate under New York Stock Exchange listing standards, and that Ms. Lora qualifies as an “audit committee financial expert” under Securities and Exchange Commission rules.

   The report of the Audit and Compliance Committee is included in this Proxy Statement on page 49 below. The Audit and Compliance Committee Charter is included with this Proxy Statement at Attachment B.

   Management Development and Compensation Committee. The Management Development and Compensation Committee represents and assists the Board in fulfilling its responsibilities for oversight of:

   The Management Development and Compensation Committee also oversees the preparation of a required report on executive compensation for inclusion in the annual proxy statement and is charged with the duties and responsibilities listed in its Charter.

   In addition to being independent under our Governance Principles and New York Stock Exchange listing standards, the Board has determined that each current member of the Management Development and Compensation Committee is a “non-employee director” under Securities and Exchange Commission rules and an “outside director” under Section 162(m) of the Internal Revenue Code.

   No member of the Management Development and Compensation Committee was part of a “compensation committee interlock” during our 2005 fiscal year as described under Securities and Exchange Commission rules. In addition, none of our executive officers served as a director or member of the compensation committee of another entity that would constitute a “compensation committee interlock.”

   The report of the Management Development and Compensation Committee is included in this Proxy Statement beginning on page 33 below.

   Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee represents and assists the Board in fulfilling its responsibilities to:

   The Nominating and Corporate Governance Committee also reviews and makes recommendations to the full Board on proposed changes to our certificate of incorporation and bylaws, periodically assesses and recommends action with respect to our stockholder rights plan and other stockholder protections, and is charged with the other duties and responsibilities listed in its Charter.

   The Board has determined that each member of the Nominating and Corporate Governance Committee is independent under our Governance Principles and New York Stock Exchange listing standards.

   Executive Committee. The Executive Committee provides Director oversight, and may act on the full Board’s behalf (except to the extent restricted by applicable law), between regular meetings of the Board to the extent necessary for us to operate efficiently. The Executive Committee typically acts only pursuant to authority specifically delegated to it by the full Board, and all actions taken by the Executive Committee between Board meetings are considered and ratified at the next regular meeting of the full Board. The Executive Committee did not meet in our 2005 fiscal year, but acted periodically by written consent.

Executive Sessions of Independent Directors

   The independent Directors meet in executive sessions without management present at least twice a year. Two executive sessions were held in the 2005 fiscal year. The Chair of the Nominating and Corporate Governance Committee, currently Mr. Johnson, serves as the Board’s Presiding Director and schedules and chairs the executive sessions. The Presiding Director performs other functions as the Board may direct. Any independent Director can request an additional executive session.

Communications with the Board

   You may write to the Board or to any of the independent Directors c/o our Corporate Secretary at KB Home, 10990 Wilshire Boulevard, Los Angeles, California 90024. The Corporate Secretary reviews all such written correspondence promptly upon receipt and will forward it, as the Corporate Secretary determines is appropriate, to a Committee Chair, individual Director and/or to the Presiding Director. Directors who receive such correspondence determine, individually or with other Direc-

tors and/or management, whether and how to respond.

Consideration of Director Candidates

   The Nominating and Corporate Governance Committee is responsible for identifying and evaluating Director candidates on the Board’s behalf. Director candidates may come to the attention of the Nominating and Corporate Governance Committee through current Board members, professional search firms or other persons. These candidates are evaluated at regular or special meetings of the Nominating and Corporate Governance Committee, and may be considered at any point during the year.

   Stockholders may recommend a candidate for the Nominating and Corporate Governance Committee’s consideration by submitting the candidate’s name and qualifications to the Corporate Secretary at the address listed above under the heading “Communications with the Board.” Candidates recommended by stockholders will be evaluated in the same manner as candidates recommended by any other person.

Director Compensation

   Only non-employee Directors receive compensation for their Board and Committee service. Non-employee Directors are compensated on a “Director Year” basis, which is the period between Annual Meetings. Accordingly, the “2005 Director Year” commenced on April 7, 2005, the date of our 2005 Annual Meeting, and will conclude on April 6, 2006, the date of our 2006 Annual Meeting.

   Non-Employee Director Compensation. Non-employee Director compensation is currently provided under our Non-Employee Directors Stock Plan (the “Director Plan”).

   The Director Plan provides each non-employee Director with an annual cash retainer of $80,000 and an annual grant of 4,000 deferred “Stock Units.” Committee Chairs receive an additional grant of “Stock Units.”

   A “Stock Unit” is a contract right to receive a cash payment equal to the fair market value of a share of our Common Stock.

   Annual Retainer. Each non-employee Director may receive the annual cash retainer in quarterly installments of $20,000 paid out over the course of a Director Year.

   Under the Director Plan, each non-employee Director may elect to receive the annual cash retainer in Stock Units or in Stock Options. If a Director elects to receive the annual cash retainer in Stock Units, the Stock Units are granted at the beginning of a Director Year at a value of 120% of the cash value of the retainer on the day of grant.

   If a non-employee Director elects to receive Stock Options in lieu of the annual cash retainer, the Stock Options will have an exercise price equal to the closing price of our Common Stock on the New York Stock Exchange on the date of grant. The number of Stock Options granted is based on the closing price of our Common Stock on the date of grant and a Black-Scholes ratio of 25%.

   Stock Options granted to a non-employee Director under the Director Plan are fully vested when granted, but cannot be exercised until the earlier to occur of (a) the Director’s acquisition and continued ownership of at least 5,000 shares of our Common Stock or (b) the date the Director ceases to serve on our Board. These Stock Options have a term of fifteen years, although they must be exercised within one year of the date the Director ceases to serve on our Board.

   Annual Stock Unit Grant. Each non-employee Director receives an annual grant of 4,000 Stock Units at the beginning of each Director Year. A Director may elect to receive the annual Stock Unit

grant in Stock Options, which will have an exercise price equal to the closing price of our Common Stock on the date of grant. The number of Stock Options granted is based on the closing price of our Common Stock on the New York Stock Exchange on the date of grant and a Black-Scholes ratio of 25%.

   Non-employee Directors are paid the equivalent of cash dividends on their Stock Units when cash dividends are paid on our Common Stock. The amount of these cash dividend equivalent payments is equal to the number of Stock Units held multiplied by the amount of the cash dividend paid on a share of our Common Stock. Stock Units granted to a non-employee Director under the Director Plan are paid out in cash when the Director leaves the Board, and the amount paid is equal to the Stock Units held multiplied by the closing price of our Common Stock on the last business day before the payment date.

   Committee Chair Retainer. At the beginning of each Director Year, the Chair of the Audit and Compliance Committee receives an additional annual retainer of 1,000 Stock Units, and each Chair of the other Board Committees receives an annual retainer of 600 Stock Units. A Committee Chair may elect to receive the Chair Stock Unit grant in Stock Options as described above.

   Cash Election. Although the Director Plan provides the non-employee Directors with the option to receive payout of any Stock Units and Stock Options in shares of our Common Stock, in December 2005 all non-employee Directors elected to receive all payouts of such stock-based awards granted to them under the Director Plan in cash. Accordingly, if and when made, the cash payout of each outstanding Stock Option award under the Director Plan will be an amount equal to the difference between the closing price of the Common Stock on the last business day before the payment date and the exercise price of the Stock Option award.

   Directors Legacy Program. Under our Directors Legacy Program we will make a charitable donation on each Director’s behalf of up to $1,000,000. Each donation can be allocated to up to five qualifying institutions or organizations of the Director’s choice upon his or her death.

   To qualify to receive a donation, a recommended recipient must be an educational institution or charitable organization which can receive tax-deductible donations under the Internal Revenue Code.

   The Directors Legacy Program has no direct compensation value to Directors or their families because they do not receive any cash compensation or tax savings. Directors vest in the full donation in five equal annual installments of $200,000, and therefore must serve on the Board for five consecutive years to be able to donate the maximum amount.

   We fund the Directors Legacy Program through life insurance contracts we maintain on the lives of the participating Directors. The life insurance proceeds are expected to equal our cost to maintain the program.

Copies of Governance Principles, Ethics Policy and Board Committee Charters

   Copies of our Governance Principles, Ethics Policy and all Board Committee Charters can be viewed on and downloaded from our website at http://www.kbhome.com/investor/main. Stockholders may request free print copies of our Governance Principles, Ethics Policy and Board Committee Charters by writing to the Corporate Secretary at the address on page 9 above under the heading “Communications with the Board.”

Proposals to be Voted on

Proposal 1:

Election of Directors

    At the Annual Meeting, the Board of Directors will present as nominees and recommend to stockholders that Messrs. Karatz, Jastrow and McCaffery and Ms. Lora be elected as Class II Directors to serve for a three-year term ending at the 2009 Annual Meeting. Each nominee is currently a Director, is standing for re-election, has consented to being nominated and has agreed to serve as a Director if elected. Should any of these nominees become unable to serve as a Director prior to the Annual Meeting, the persons named on the enclosed Proxy Card will, unless otherwise directed, vote for the election of such other person as the Board of Directors may recommend in place of such nominee.

Vote Required

   The election of each Director nominee will require the affirmative vote of a plurality of shares of Common Stock present or represented at the Annual Meeting.

   Your Board recommends a vote FOR the election to the Board of each of the following nominees. A brief summary of each nominee’s principal occupation, recent professional experience and their directorships at other public companies, if any, is provided below.

Bruce Karatz, age 60, has been Chairman of the Company since 1993 and Chief Executive Officer since 1986. Mr. Karatz joined the Company’s predecessor in 1972, and from 1976 through 1980 was President of its French homebuilding subsidiary, Kaufman & Broad S.A. From 1980 until the formation of the Company in 1986, Mr. Karatz was President of Kaufman and Broad Development Group. Mr. Karatz is a director of Honeywell International Inc., Edison International, and Kaufman & Broad S.A. Mr. Karatz has been a Director of the Company since 1986.

Kenneth M. Jastrow, II, age 58, has been Chairman and Chief Executive Officer of Temple-Inland Inc. since 2000. Prior to that, Mr. Jastrow served as President and Chief Operating Officer in 1998 and 1999, Group Vice President from 1995 until 1998, and as Chief Financial Officer of Temple-Inland from November 1991 until 1999. Mr. Jastrow is also a director of MGIC Investment Corporation. He joined the Board of Directors in December 2001.

Melissa Lora, age 43, is the Chief Financial Officer of Taco Bell Corp., a position that she has held since 2001. Ms. Lora joined Taco Bell Corp. in 1987 and has held various positions throughout the company, most recently acting as Regional Vice President and General Manager from 1998 to 2000 for Taco Bell’s operations throughout the Northeastern United States. Ms. Lora joined the Board of Directors in April 2004.

Michael G. McCaffery, age 52, is President and Chief Executive Officer of the Stanford Management Company, which was established in 1991 to manage the $10.9 billion endowment of Stanford University’s financial and real estate investment assets. Previously, Mr. McCaffery was Chairman and Chief Executive Officer of Robertson Stephens Investment Bankers, a position he held since 1993. Mr. McCaffery is a director of Western Technology Ventures, The Investment Fund for Foundations, RS Investment Trust and is a member of the Advisory Board of Accel Ventures. Mr. McCaffery joined the Board of Directors in July 2003.

   Listed below are our other incumbent Directors and their respective principal occupations, business affiliations and other information for at least the past five years.

Ron Burkle, age 53, is the founder and managing partner of The Yucaipa Companies, a private investment firm based in Southern California. Yucaipa specializes in acquisitions, mergers and management of large retail, manufacturing and distribution companies. Mr. Burkle has served as Chairman of the Board and controlling shareholder of numerous companies including Alliance Entertainment, Dominick’s, Fred Meyer, Ralphs and Food4Less. He is currently a member of the board of Occidental Petroleum Corporation, Yahoo! Inc. and Kaufman & Broad S.A., the Company’s publicly-traded French subsidiary. He has been a Director of the Company since 1995 and his current term expires in 2007.

Timothy W. Finchem, age 58, has been Commissioner of the PGA TOUR since 1994. He joined the TOUR staff as Vice President of Business Affairs in 1987, and was promoted to Deputy Commissioner and Chief Operating Officer in 1989. Mr. Finchem served in the White House as Deputy Advisor to the President in the Office of Economic Affairs in 1978 and 1979, and in the 1980’s co-founded the National Marketing and Strategies Group in Washington, D.C. He joined the Company’s Board in May 2005 and his current term expires in 2008.

Dr. Ray R. Irani, age 71, is Chairman, President and Chief Executive Officer of Occidental Petroleum Corporation. He joined Occidental in 1983 as Chairman and Chief Executive Officer of Occidental Chemical Corporation, an Occidental subsidiary, and as Executive Vice President of Occidental. In 1984 he was elected to the Board of Directors of Occidental and was named President and Chief Operating Officer. He assumed the responsibilities of Chairman and Chief Executive Officer in 1990, and the additional position of President in 2005. Dr. Irani was Chairman of the Board of Directors of Canadian Occidental Petroleum Ltd., an Occidental affiliate, from 1987 to 1999. Dr. Irani is a director of Lyondell Chemical Company and Kaufman & Broad S.A., the Company’s publicly-traded French subsidiary. Dr. Irani has been a Director of the Company since 1992 and his current term expires in 2007.

James A. Johnson, age 62, has been Vice Chairman of Perseus LLC, a merchant banking and private equity firm, since 2001. In 2000, Mr. Johnson served as Chairman and Chief Executive Officer of Johnson Capital Partners, a private investment company. Mr. Johnson was employed by Fannie Mae from 1990 through 1999, where he served as Vice Chairman in 1990, Chairman and Chief Executive Officer from 1991 through 1998 and Chairman of the Executive Committee of the Board in 1999. He serves on the boards of Gannett, Inc., Target Corporation, UnitedHealth Group, The Goldman Sachs Group, Inc., and Temple-Inland Inc. Mr. Johnson has been a member of the Board of Directors since 1992 and his current term expires in 2008.

J. Terrence Lanni, age 63, has been Chairman of MGM MIRAGE since July 1995, and Chief Executive Officer from June 1995 to December 1999, and since March 2000. Before joining MGM MIRAGE, Mr. Lanni was President and Chief Operating Officer of Caesars World, Inc. from April 1981 to February 1995. Mr. Lanni has been a Director of the Company since 2003 and his current term expires in 2008.

Leslie Moonves, age 56, has been President and Chief Executive Officer, CBS Corporation since December 2005 when Viacom Inc. was split into two separate companies. From 2004 until the Viacom Inc. separation, Mr. Moonves served as Co-President and Co-Chief Operating Officer, Viacom Inc. and Chairman of CBS. He was elevated to the position of Chairman and Chief Executive Officer, CBS in 2003 with responsibility for UPN after serving as President and Chief Executive Officer, CBS Television since 1998. Mr. Moonves joined CBS in 1995 as President, CBS Entertainment. Prior to that, Mr. Moonves was President of Warner Bros. Television from 1993, when Warner Bros. and Lorimar Television combined operations. From 1989-1993, he was president of Lorimar Television. Mr. Moonves has served on the Board since 2004 and his current term expires in 2007.

Luis G. Nogales, age 62, is the Managing Partner of Nogales Investors, LLC, a private equity investment firm. He was Chairman and Chief Executive Officer of Embarcadero Media, Inc. from 1992 to 1997, President of Univision Communications, Inc., from 1986 to 1988, and Chairman and Chief Executive Officer of United Press International from 1983 to 1986. He is a director of Edison International, Southern California Edison, Arbitron, and Kaufman & Broad S.A., the Company’s publicly-traded French subsidiary. Mr. Nogales has been a Director of the Company since 1995 and his current term expires in 2007.

Proposal 2:

Approval of an Amendment to the Amended Certificate of Incorporation of

KB Home to decrease the number of Authorized Shares of KB Home

Common Stock from 300,000,000 shares to 290,000,000 shares

    The Board of Directors proposes to amend our Amended Certificate of Incorporation to decrease the number of authorized shares of our Common Stock from 300,000,000 shares to 290,000,000 shares.

   This proposal fulfills a commitment we made in a March 17, 2005 letter to stockholders in connection with a proposal made at our 2005 Annual Meeting to increase the authorized shares of our Common Stock from 100,000,000 shares to 300,000,000 shares (the “2005 Proposal”). The primary purpose of the 2005 Proposal was to permit us to pursue a two-for-one stock split in the form of a stock dividend to stockholders and to provide us with sufficient authorized shares for other appropriate future corporate purposes, as described in the 2005 Proposal.

   If stockholders approved the 2005 Proposal, we committed to propose that stockholders authorize at this Annual Meeting the reduction of the number of authorized shares of our Common Stock to 290,000,000 shares. We also committed not to issue shares of our Common Stock that would cause the total number of outstanding shares to exceed 290,000,000 shares before the date of this Annual Meeting without first obtaining stockholder approval.

   Stockholders approved the 2005 Proposal and we effected a two-for-one stock split of our Common Stock in the form of a stock dividend on April 28, 2005. As of the filing date of this Proxy Statement, we have not issued shares of our Common Stock to cause the total number of outstanding shares to exceed 290,000,000 shares, and we do not intend to do so prior to the date of the Annual Meeting.

   In order to fulfill our commitment, the Board adopted the following proposed amendment to our Amended Certificate of Incorporation at its February 9, 2006 meeting, subject to stockholder approval, and declared the proposed amendment to be advisable:

Current Capital Structure

   As of the February 14, 2006 record date 93,180,138 shares of our Common Stock were issued and outstanding, including 12,981,680 shares held by our Grantor Stock Ownership Trust and excluding 21,020,516 shares of Common

Stock held in treasury. There were 13,268,412 shares of Common Stock reserved for issuance upon exercise of outstanding stock options and stock options and stock awards that may be granted in the future under our equity compensation and incentive plans. Accordingly, there are 172,530,934 authorized shares of Common Stock currently available for issuance. There are no shares of Special Common Stock or Preferred Stock currently outstanding.

Impact of Proposed Amendment

   The proposed amendment would decrease the total number of authorized shares of our Common Stock by 10,000,000 shares. The proposed amendment would not change any of the current rights and privileges of our Common Stock or its par value. In addition, the proposed amendment would not in any way limit our ability to use the authorized shares of our Common Stock for appropriate future corporate purposes (which would not require further stockholder action or approval), including paying future stock dividends, raising capital through Common Stock offerings, funding future employee benefit plan obligations and issuing Common Stock in acquisitions or other strategic transactions.

   The proposed amendment would also not limit in any way our ability to use the authorized shares of our Common Stock to oppose hostile takeover attempts or to delay or prevent a change in control of us. We have no present intention to issue or use shares of our Common Stock for such purposes, and we are not currently aware of any takeover attempt or potential change of control.

   Based on the foregoing and our prior commitment, the Board believes it is desirable and in our and our stockholders’ best interests at this time to adopt the proposed amendment to reduce our authorized shares of Common Stock from 300,000,000 shares to 290,000,000 shares.

Vote Required

   Approval of the proposed amendment to our Amended Certificate of Incorporation req