UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended November 30, 20212022

or

Securities Registered Pursuant to Section 12(g) of the Act: None

KB HOME

FORM 10-K

FOR THE YEAR ENDED NOVEMBER 30, 20212022

PART I

General

KB Home is one of the largest and most recognized homebuilding companies in the U.S. We have been building homes for more than 65 years, with over 655,000670,000 homes delivered since our founding in 1957. We build a variety of new homes designed primarily for first-time and first move-up, as well as second move-up and active adult homebuyers, including attached and detached single-family residential homes, townhomes and condominiums. We offer homes in development communities, at urban in-fill locations and as part of mixed-use projects. Our homebuilding operations represent the majority of our business, accounting for 99.7% of our total revenues in 2021.2022. Our financial services operations, which accounted for the remaining .3% of our total revenues in 2021,2022, offer various insurance products to our homebuyers in the markets where we build homes and provide title services in certain of those markets. Our financial services operations also provide mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans, LLC (“KBHS”), which is an unconsolidated joint venture between us and a third party.

Unless the context indicates otherwise, the terms “we,” “our” and “us” used in this report refer to KB Home, a Delaware corporation, and its predecessors and subsidiaries. We also use the following terms in our business with the corresponding meanings: “home” is a single-family residence, whether it is a single-family home or other type of residential property; “homes delivered” are homes for which the sale has closed and title has passed to a customer; “community” is a single development in which new homes are constructed as part of an integrated plan; and “community count” is the number of communities we have open for sales with at least five homes/lots left to sell.

Markets

Reflecting the geographic reach of our homebuilding business, we have ongoing operations in the nine states and 47 major markets presented below. We also operate in various submarkets within these major markets. We may refer to these markets and submarkets collectively as our “served markets.” For reporting purposes, we organize our homebuilding operations into four segments — West Coast, Southwest, Central and Southeast.

KB Edge consists of the following key principles with respect to customers, land, products and operations:

We also cultivate and leverage close supplier and business partner relationships to integrate into or offer with our products architectural elements (such as flex spaces that can serve multiple purposes, quiet zones or home offices), building materials, construction techniques, and structural and non-structural systems, and components and devices that are aligned with the preferences identified in our surveys and other data sources, including with the design optionssources.

other personnel. This team is available to guide each homebuyer through each major step of the design, construction and closing of their KB home and aims to make the process as easy and straightforward as possible.

We believe our approach differentiates us in the homebuilding industry and, along with our company culture that sustains it, enhances customer satisfaction. We are proud of the high levels of satisfaction our homebuyers have reported to us and on outside surveys.survey firms. In 2021,2022, we achievedcontinued to be the top rankhighest-ranked national homebuilder for customer satisfaction among homebuilders in third-party surveys, which we believe reflects the effective dedication we have to our homebuyers.

We typically sell our homes through commissioned sales associate employees from sales offices located in or adjacent to furnished model homes in each community. We also use electronic sales capabilities which we have progressively enhanced since 2020, as the outbreak of the 2019 coronavirus disease (“COVID-19”) pandemic and the related responses by public health and governmental authorities to contain and combat its outbreak and spread (“COVID-19 control responses”) accelerated our use of technology to give our customers a variety of convenient ways to shop for and purchase a new KB home, including, among other things:

In addition, as part of our commitment to sustainability, which is discussed further below under “Environmental, Social and Governance,” and providing our customers a simple path to homeownership, we continue to work towards the goal of paperless homebuying. Over the past few years, we have eliminated a significant amount of paper from our home purchase contract by reducing the number of forms required to complete the process and digitizing as many of the remaining forms as possible. We plan to make additional investments in our digital sales and marketing tools in 2022.2023.

We market our homes to prospective homebuyers and real estate brokers through a variety of media, and use data analytics to target our advertising and measure its effectiveness and efficiency in terms of generating leads and net orders. In recent years and in response to the growing number of millennial and Generation Z homebuyers, we have increased our emphasis on digital marketing, through search engine marketing, interactive Internet-based applications, email, social media, outlets, our website and other evolving communication technologies. We also use print media, billboards, radio, magazine and newspaper advertising in our served markets, as necessary.

Our corporate management and support personnel develop and oversee the implementation of company-wide strategic initiatives, our overall operational policies and internal control standards, and perform various centralized functions, including architecture; purchasing and national contracts; treasury and cash management; land acquisition approval; risk and litigation management; accounting and financial reporting; internal audit and compliance activities; information technology (“IT”) systems; marketing; and investor and media relations.

Community Development and Land Inventory Management

Developable land for the production of homes is a core resource for our business. Based on our current strategic plans, we seek to own or control land sufficient to meet our forecasted production goals for the next four to six years. In 2022,2023, we intend to continue to invest in and develop land positions within attractive submarkets and selectively acquire or control additional land that meets our investment return standards. However, westandards, though at a lower level than in the prior two years, as discussed below under Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report. We may periodically sell certain land interests or monetize land previously held for future development.development to strategically balance our land portfolio in line with local or national market environments or for other reasons. We may also decide not to exercise certain land option contracts and other similar contracts due to market conditions and/or changes in our marketing strategy.

Our community development process generally consists of four phases: land acquisition, land development into finished lots for a community (if necessary), home construction and delivery of completed homes to homebuyers. Historically, our community development process has typically ranged from 12 to 24 months in our West Coast homebuilding reporting segment, with a somewhat shorter duration in our other homebuilding reporting segments. The development process in our West Coast homebuilding reporting segment is typically longer than in our other segments due to the municipal and regulatory requirements that are generally more stringent in California. Our community development process varies based on, among other things, the extent and speed of required government approvals and utility service activations, the overall size of a particular community, the scope of necessary site preparation activities, the type of product(s) that will be offered, weather conditions, time of year, promotional marketing results, the availability of construction resources, consumer demand, local and general economic and housing market conditions, and other factors. In 2021,2022, as noted above under “Business Strategy,” we experienced extendedour community development timelines extended due to nationwide supply chain disruptions that, among other things, created shortages of

Although they vary significantly in size and complexity, our single-family residential home communities typically consist of 50 to 200 lots per product line, with lots ranging in size from 1,700 to 11,000 square feet. In our communities, we typically offer three to 15 home design choices. We also generally build one to three model homes at each community so that prospective homebuyers can preview the various products available. Depending on the community, we may offer premium lots containing more square footage, better views and/or location benefits. Some of our communities consist of multiple-story structures that encompass several attached condominium-style units.

As part of the decision-making process for approving a land purchase, we review extensive information about a proposed project, including past use; assessment of environmentally-sensitiveenvironmentally sensitive areas and areas that may be suitable for parks, trails, and open space preservation areas; assessment of site development required, including any work needed to comply with storm water regulations; distance to major employment and retail centers; and site design and product (home designs and specifications) plans that are consistent with our commitment to building 100% ENERGY STAR homes using 100% WaterSense® labeled fixtures, as discussed below under “Environmental, Social and Governance.”

We generally structure our land acquisition and land development activities to minimize, or defer the timing of, expenditures in order to reduce both the market risks associated with holding land and our working capital and financial commitments, including interest and other carrying costs. We typically use contracts that, in exchange for a small initial option payment or earnest money deposit, give us an option or similar right to acquire land at a future date, usually at a pre-determined

price and pending our satisfaction with the feasibility of developing and selling homes on the land and/or an underlying land seller’s completion of certain obligations, such as securing entitlements, developing infrastructure or finishing lots. We refer to land subject to such option or similar contractual rights as being “controlled.” Our decision to exercise a particular land option or similar right is based on the results of our due diligence and continued market viability analysis after entering into such a contract.

The following table presents the number of inventory lots we owned, in various stages of development, or controlled under land option contracts or other similar contracts by homebuilding reporting segment as of November 30, 20212022 and 2020:2021:

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. These independent contractors also supply some of the building materials required for such production activities. Our contracts with these independent contractors require that they comply with all laws applicable to their work, including wage and safety laws, meet performance standards, follow local building codes and permits, and abide by our Ethics Policy referenced under Item 10 – Directors, Executive Officers and Corporate Governance in this report.

Backlog

Our “backlog” consists of homes that are under a purchase contract but have not yet been delivered to a homebuyer. Ending backlog represents the number of homes in backlog from the previous period plus the number of net orders (new orders for homes less home purchase contract cancellations) generated during the current period minus the number of homes delivered during the current period. Our backlog at any given time will be affected by cancellations, homes delivered and our community count. Backlog value represents potential future housing revenues from homes in backlog. Our cancellation rates and the factors affecting such rates are further discussed below under both Item 1A – Risk Factors and Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report.

Competition, Seasonality, Delivery Mix and Other Factors

compete for homebuyers against housing alternatives to new homes, including resale homes, apartments, single-family rentals and other rental housing.

In markets experiencing extensive construction activity, including areas recovering from earthquakes, wildfires, hurricanes, flooding or other natural disasters, there can be craft and skilled trade shortages that limit independent contractors’ ability to supply construction services to us, which in turn tends to drive up our costs and/or extend our production schedules. Elevated construction activity, and reallocations of staff for public safety priorities after natural disasters or otherwise, has also contributed to measurable increases in the amount of time needed to obtain governmental approvals or utility service activations and, combined with tariffs imposed or increased by the U.S. and other governments, the cost of certain raw building materials, such as steel, Canadian lumber, drywall and concrete, or finished products. Since 2020, we have experienced intensifying building material cost pressures, particularly for lumber, and production capacity issues with some of our main product suppliers, reflecting sustained high levels of homebuilding and renovation activity combined with supply chain disruptions stemming from international and domestic COVID-19 control responses and economy-wide labor shortages in the U.S.responses. In addition, since 2013, we have seen higher prices for desirable land amid heightened competition with homebuilders and other developers and investors (both domestic and international), particularly in the land-constrained areas where we operate. We expect these upward cost trends to continue in 2022,2023, if and as housing market activity grows and there is greater competition for these resources across a disrupted global supply chain.

communities for sales, and market and build homes; the size of our homes; our selling prices (including the contribution from homebuyers’ purchases of design options and upgrades); the pace at which we sell and deliver homes; the rate at which communities are sold out; and our housing gross profits and housing gross profit margins. Therefore, our results in any given period will fluctuate compared to other periods based on the proportion of homes delivered from areas with higher or lower selling prices and on the corresponding land and overhead costs incurred to generate those deliveries, as well as from our overall community count.

Human Capital Resources

At November 30, 20212022 and 2020,2021, we had approximately 2,2442,366, and 1,7522,244 full-time employees, respectively. None of our employees are represented by a collective bargaining agreement. For fiscal 2022, our turnover rate was 21%, made up of 19% voluntary turnover and 2% involuntary turnover. For fiscal 2021, our turnover rate was 16%, made up of 15% voluntary turnover and 1% involuntary turnover. We believe these rates are reasonable for our industry and market conditions at the time.

Our top division and regional leaders average more than 11 years of tenure with us, and the local leaders responsible for land acquisition, entitlement, and development average over nine years with us. In addition, our named executive officers who are responsible for setting our overall strategy average 1920 years of tenure with us and more than two decades in the homebuilding industry. Our leadership team’s long service history provides consistency in managing our business and helps reinforce and sustain our company culture through all levels of the organization.

To recognize and promote outstanding employees, we conduct a comprehensive talent and succession planning review process on an annual basis, focused on identifying top-performing, high-potential, and diverse team members for advancement to key field and corporate leadership roles. This review process is overseen by the management development and compensation committee of our board of directors, the members of which also guides updateshave significant experience and refinements to ourinsight into human capital investmentmanagement, talent development and development strategies.executive compensation across a variety of organizational structures, as well as strong backgrounds in executive leadership.

As we believe a hybrid approach of in-office and remote participation is how many work environments are or will be structured, and it has been effective for most of our operations, we implemented various stepsa flexible work program in our division and corporate office locations throughout 2022 that establishes a certain number of in-office workdays and is intended to address the safety and health ofhelp our workforce due to the COVID-19 pandemic. Some examples include the following: temporarily closed our offices and established new safety protocols and procedures; maintained regular communication regarding the impacts of the pandemic on our team members and operations; developed and refined a playbook to guide the safe return to offices, communities, and work sites; provided paid time off for those directly impacted by COVID-19 and instructed those who are infected to stay home; offered additional paid time off for employees to receive their COVID-19 vaccinesmaintain a reasonable professional/personal life balance as we continue to invest in and recover from resulting side effects; increased cleaning protocols across all locations; established physical distancing procedures, modifying workspaces, and providing personal protective equipment and cleaning supplies for employees who need to be onsite; and invested inprotect our IT systems to support a working environment that encompasses a mix of remote and in-person arrangements. We continued, and in some instances, expanded these efforts throughout 2021 to help enhance our employees’ well-being and productivity.strong company culture.

Environmental, Social and Governance (“ESG”)

For nearlymore than 15 years, we have made a dedicated effort to become a leading national companybe an industry leader in sustainability, which encompasses our ESG practices. We believe our longstanding, industry-leading sustainability initiatives provide tangible benefits for our customers, our operations and the environment, and distinctly differentiate us from other builders of new homes and from resale homes. We have established an Environmental Management System (“EMS”), through which we focus on continually reducing the greenhouse gas (“GHG”) emissions associated with the use of the homes over their multi-decade life cycle. Our EMS, and its related manuals and other documentation, provides a framework for planning, implementing, measuring, evaluating and refining these efforts over time. In addition to our internal executive team who implements and operates within the EMS, we monitor evolving trends and gather input and guidance for our initiatives through our National Advisory Board, which is a panel of external advisors that we call our National Advisory Board, which we established in 2009 solely for these purposes. These advisors, who have a broad and diverse set of personal and professional perspectives,

We were the first national homebuilder to join the EPA’s WaterSense program, which is a voluntary partnership program that is both a label for water-efficient products and a resource for helping conserve water. According to the EPA, WaterSense labeled products use at least 20% percent less water compared to products that are not WaterSense labeled. To date, we have built over 18,00019,000 WaterSense and Water Smart homes, more than any other homebuilder, and installed over 900,0001.0 million WaterSense labeled fixtures, collectively helping to save an estimated 1.61.7 billion gallons of water per year. We were the first national homebuilder to implement the new WaterSense Labeled Homes Program, Version 2, which was released in February 2021 and requires homes to be at least 30% more water efficient than a typical new home.

Our annual sustainability reports, which we have published on our website since 2008, contain more information about our programs, goals, and achievements.

Safety is a priority for our employees, our homebuyers and our independent contractors. To get a sense of our independent contractors’ compliance with their safety obligations, we track nearly 50 checkpoints across key aspects of jobsite safety, including safety documentation, personal protective equipment, scaffolding and ladders, fall protection, trenching and excavation, hazard assessment protocol, first aid and emergency plan, electrical safety and material safety.

We have a Supplier Code of Conduct that builds upon the principles, guidelines and standards within our Ethics Policy, including operating in accordance with applicable laws; treating all workers fairly and with dignity and respect; and providing a clean, safe and healthy work environment.environment without the use of any involuntary or forced labor. Our Supplier Code of Conduct also encourages our suppliers to operate in an

More information concerning our corporate governance can be found in our Proxy Statement for the 20222023 Annual Meeting of Stockholders (“20222023 Proxy Statement”).

Government Regulations and Environmental Matters

Our operations are subject to myriad legal and regulatory requirements concerning land development (including governmental permits, taxes, assessments and fees), the homebuilding process, employment conditions and worksite health and safety. These requirements often provide broad discretion to government authorities, and they could be interpreted or revised in ways that delay or prohibit project development or home sales, and/or make these activities more costly. The costs to comply, or associated with any noncompliance, are, or can be, significant and variable from period to period. A liability for environmental remediation and other environmental costs is accrued when we consider it probable that a liability has been incurred and the amount of loss can be reasonably estimated. Environmental costs and accruals were not material to our operations, cash flows or financial position in 2022, 2021 or 2020.

Under applicable environmental laws (including those aimed at protecting against climate change impacts), we may be responsible for, among other things, removing or remediating hazardous or toxic substances even where we were not aware of their presence or on land we previously owned. In addition to incurring clean-up costs, the presence of harmful substances on or near our properties may prevent us from performing land development or selling homes. Also, we are subject to federal, state and local rules that can require us to undertake extensive measures to prevent or minimize discharges of stormwater and other materials from our communities, and to protect wetlands and other designated areas.

contamination or other environmental issues have occurred in the past, we will attempt to recover restoration costs from third parties, such as the generators of hazardous waste, land sellers or others in the prior chain of title and/or their insurers. However, despite these efforts, there can be no assurance that we will avoid material liabilities relating to the existence or removal of toxic wastes, site restoration, monitoring or other environmental matters affecting properties currently or previously owned or controlled by us, and no estimate of any potential liabilities can be made.

Available Information

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, beneficial ownership reports on Forms 3, 4 and 5 and proxy statements, as well as all amendments to those reports are available free of charge through our investor relations website at investor.kbhome.com, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). They can also be found at the SEC’sSEC website at www.sec.gov. We will also provide these reports in electronic or paper format free of charge upon request made to our investor relations department at investorrelations@kbhome.com or at our principal executive offices. We intend for our investor relations website to be the primary location where investors and the general public can obtain announcements regarding, and can learn more about, our financial and operational performance, business plans and prospects, our board of directors, our senior executive management team, and our corporate governance policies, including our articles of incorporation, by-laws,By-Laws, corporate governance principles, board committee charters, and ethics policy. We may from time to time choose to disclose or post important information about our business on or through our investor relations website, and/or through other electronic channels, including social media outlets, such as Facebook® (Facebook.com/KBHome) and Twitter® (Twitter.com/KBHome), and other evolving communication technologies. The content available on or through our primary website at www.kbhome.com, our investor relations website, including our sustainability reports, Human Rights Statement, Supplier Code of Conduct and other ESG-related policies, or social media outlets and other evolving communication technologies is not incorporated by reference in this report or in any other filing we make with the SEC, and our references to such content are intended to be inactive textual or oral references only.

Also, California’s highly regulated and litigious business environment has made the state an increasingly challenging and uncertaindifficult place for us to operate. This includes implementing regulations under the state’s Global Warming Solutions Act of 2006 (AB32) intended to lower GHG emissions. For instance, we have and will continue to incur higher construction costs because of a state law requirement that effectively requires that all new homes permitted to build in 2020 and beyond have solar

None.

None.

Our legal proceedings are discussed in Note 18 – Legal Matters in the Notes to Consolidated Financial Statements in this report.

Not applicable.

Information about our Executive Officers

The following table presents certain information regarding our executive officers as of December 31, 2021:2022:

Our common stock is traded on the New York Stock Exchange under the ticker symbol “KBH.” As of December 31, 2021,2022, there were 569567 holders of record of our common stock.

Information regarding the shares of our common stock that may be issued under our equity compensation plans is provided below under Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters in this report.

The following table summarizes our purchases of our own equity securities during the three months ended November 30, 2021:2022:

As of November 30, 2020,2021, we had 2,193,947331,400 shares authorized for repurchase under a share repurchase program approved by our board of directors in 2018.July 2021. On July 8, 2021,April 7, 2022, our board of directors authorized us to repurchase up to 5,000,000 shares$300.0 million of our outstanding common stock. This authorization reaffirmed and incorporated the then-current balance of 2,193,947 shares that remained understock, replacing the prior authorization.board of directors authorization, as further discussed in Note 19 – Stockholders’ Equity in the Notes to Consolidated Financial Statements in this report. In the 2021 third2022 fourth quarter, we purchased 4,668,6001,826,349 shares of our common stock pursuant to this authorization at a total cost of $188.2$50.0 million, bringing our total repurchases in 2022 to 4,927,499 shares at a total cost of $150.0 million. As of November 30, 2021,2022, we had 331,400 shareswere authorized for repurchase.to repurchase up to $150.0 million of our outstanding common stock.

The shares purchased duringDuring the three months ended November 30, 2021 were2022, we also purchased certain previously issued shares delivered to us by employees to satisfy withholding taxes on the vesting of restricted stock awards. These transactions are not considered repurchases under the board of directors’directors authorization.

Stock Performance Graph

The following graph compares the five-year cumulative total return of KB Home common stock, the S&P 500 Index and the Dow Jones US Home Construction Index for the periods ended November 30:

Among KB Home, S&P 500 Index and

Dow Jones US Home Construction Index

Our discussion and analysis below is focused on our 20212022 and 20202021 financial results, including comparisons of our year-over-year performance between these years. Discussion and analysis of our 20192020 fiscal year specifically, as well as the year-over-year comparison of our 20202021 financial performance to 2019,2020, are located under Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended November 30, 2020,2021, filed with the SEC on January 22, 2021,21, 2022, which is available on our investor relations website at investor.kbhome.com and the SEC’sSEC website at www.sec.gov.

RESULTS OF OPERATIONS

In 2021,Our 2022 fiscal year operating environment and, as a result, business performance were exceptionally volatile, with positive housing market conditions were positive,continuing from 2021 through most of the 2022 first half, downshifting considerably in the 2022 third quarter and for the remainder of the year. In the 2022 second half, U.S. housing demand weakened significantly compared to the year-earlier period, with healthy demand, particularly from millennial and Generation Z demographic groups, a limited supplythe combination of new and resale inventory and relatively lowsharply higher mortgage loan interest rates driving strongsince early 2022, elevated inflation, several years of rising housing prices, financial market turbulence, and various other macroeconomic and geopolitical concerns negatively affecting consumer budgets, including their ability to qualify for mortgage loans, and confidence, both generally and specifically as to purchasing a home.

Despite these substantial headwinds, in 2022, we generated year-over-year improvements in our financial results forthrough our business. Considerable demand for our homes enabled us to lift selling prices in the vast majority of our communities and, in combination with ourongoing focus on balancing pace, price and construction starts at each community helped us to enhance our returns and build a substantial backlog, and the favorable pricing and housing supply/demand environment prevailing in the 2022 first half and prior periods, when most buyers contracted to purchase the homes delivered this year. However, our 2022 performance of our inventory assets and improve returns, despitewas offset by the difficult conditions during the 2022 second half, as well as supply chain challenges and risinghigher construction servicescosts, as described below.

Homebuilding revenues for 2022 grew 21% from the previous year due to an increase in housing revenues that reflected a 2% increase in the number of homes delivered to 13,738 and building materials costs. Reflecting these actions,an 18% increase in the valueoverall average selling price of our net ordersthose homes to $500,800. Approximately 53% of homes delivered in 2022 were to first-time homebuyers. Homebuilding operating income for 2021 grew 45%2022 rose 57% year over year to $7.68$1.04 billion dueand, as a percentage of homebuilding revenues, expanded 350 basis points to a 21%15.1%. The increase in our homebuilding operating income margin was driven by significant improvements in both housing gross profit margin and selling, general and administrative expenses as a percentage of housing revenues. Our pretax income margin improved 340 basis points to 15.5%. Net income and diluted earnings per share increased 45% and 51%, respectively, each as compared to 2021.

The housing affordability and other pressures described above caused many prospective buyers in the 2022 second half to pause their homebuying decisions or cancel their home purchase contracts with us, contributing to substantial year-over-year decreases in our net orders and net order value in third quarter that became more pronounced in the fourth quarter. In the 2022 fourth quarter, our year-over-year net orders and net order value declined 80% and 79%, respectively, reflecting a 20% rise in their overall average selling price. The year-over-year increasesignificant reduction in our net order volume was due to highermonthly net orders per community, partly offset by a lower average community count for the year. Our lower average community count reflected the accelerated sell-out of communities that resulted from our exceptionally strong monthly net order pace, which rose 37% to 6.3an 11% increase in 2021 from 4.6 in 2020, even as we paced lot releases to

Since 2020, we have experienced intensifying building material cost pressures, particularly for lumber, and production capacity issues with some of our main product suppliers, reflecting sustained high levels of homebuilding and renovation activity combined with supply chain disruptions stemming from international and domestic COVID-19 control responses and economy-wide labor shortages in the U.S. Our housing gross profit margin on homes delivered in the latter part of 2021 were especially impacted by high lumber costs during the period in which these homes were started.responses. In 2021 the continuingand 2022, we, like other homebuilders, continued to experience production challenges due to these supply chain disruptions, combined withas well as ongoing restricted construction services availability constraints and delays with respect to state and municipal construction permitting, inspectionsinspection and utilities,utility processes, which have been disrupted by key equipment shortages. While we have implemented measures to help mitigate these disruptions, as discussed above under Item 1 – Business in this report, they extended our construction cycle times by several weeks and delayed many expected deliveries throughout 2021 and new community openings during our fiscal year.2022. We believe these challenging conditionscircumstances affecting our land development and home construction activities will generally persist into 2022 and potentially throughout the year. Wepossibly worsen in 2023.

Though we expect affordability pressures and consumer uncertainty to have incorporated these trends into our performance expectations, as presented below under “Outlook.”

Housing revenues in 2021 advanced 37%2022 grew 21% from the previous year, due to a 26%2% increase in the number of homes delivered and a 9%an 18% increase in thetheir overall average selling price of those homes. The higher volume of homes delivered was largely due to our backlog of homes atthat primarily reflected the beginning of the year (“beginning backlog”) increasing 54% from 2020, as well as strong net order growth in 2021. In addition, the number of homes delivered in 2020 was tempered primarily by the negative impact of the COVID-19 pandemic and related COVID-19 control responses. The year-over-year increasefavorable housing market environment in the overall average selling price of our2022 first half and earlier periods when most buyers contracted to purchase those homes, delivered in 2021 reflected strong housing market conditions, which enabled us to raise prices in the vast majority of our communities, as well as product and geographic mix shifts of homes delivered. Although the homes delivered in 2022 were impacted by the ongoing supply chain disruptions and other production-related issues that extended our cycle times, as described above under “Overview,” housing revenues increased in all four of our homebuilding reporting segments, reflecting double-digit increases in average selling prices in each segment.

LandWe had no land sale revenues for 2021 decreased 39% from 2020.in 2022, compared to $10.4 million in 2021. Generally, land sale revenues fluctuate with our decisions to maintain or decrease our land ownership position in certain markets based upon the volume of our holdings, our business strategy, the strength and number of developers and other land buyers in particular markets at given points in time, the availability of opportunities to sell land at acceptable prices and prevailing market conditions.

Our housingHousing gross profit margin for 2021 increased 270 basis points from the previous year, mainly as a result of athe favorable pricinghousing market environment thatin the 2022 first half and earlier periods when most buyers purchased the homes delivered, which more than offset higher construction services and building materials costs (approximately 110280 basis points); and lower amortization of previously capitalized interest as a percentage of housing revenues (approximately 5060 basis points); a decrease in inventory-related charges. These favorable impacts were partly offset by increased expenses to support current operations (approximately 5030 basis points); an increase in operating leverage due to higher housing revenuesinventory-related charges (approximately 4030 basis points); and other miscellaneous factors (approximately 2010 basis points). As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations was 2.0% for 2022 and 2.6% for 2021 and 3.1% for 2020.2021. Excluding the amortization of previously capitalized interestinventory-related charges associated with housing operations and the above-mentioned inventory-related charges for the applicable periods,described above, our adjusted housing gross profit margin increased 170300 basis points to 24.4%24.8% in 20212022 from 22.7%21.8% in 2020.2021. The calculation of adjusted housing gross profit margin, which we believe provides a clearer measure of the performance of our business, is described below under “Non-GAAP Financial Measures.”

Selling, general and administrative expenses for 20212022 increased 22%10% from the prior year, mainlyprimarily due to an increase in commission expenses associated with our higher housing revenues, and an increase in general and administrative expenses. The year-over-year increase in general and administrative expenses primarily reflected higher costs associated with performance-based employee compensation plans, as well as expenses incurred to support current operationsour higher community count. In addition, general and expected growth, partly offset byadministrative expenses in 2021 benefited from a $4.3 million benefit from an Employee Retention Credit (“ERC”), which is discusseddescribed in Note 14 – Income Taxes in the Notes to Consolidated Financial Statements in this report, recognizedreport. Marketing expenses in early 20212022 rose from the prior year primarily due to higher advertising and the severance charges of $6.7 million recorded in 2020. Asother costs to support our higher average community count. Our selling, general and administrative expenses as a percentage of housing revenues our selling, general and administrative expenses improved 12090 basis points in 2021 as compared to 2020,2022, largely reflecting lower external sales commissions and increased operating leverage due to our higher housing revenues as compared to the previous year, partly offset by the above-mentioned higher expenses.

We incur interest principally from our borrowings to finance land acquisitions, land development, home construction and other operating and capital needs. The amount of interest incurred generally fluctuates based on the average amount of debt outstanding for the period and/orand the interest rate on that debt. In 2021,2022, total interest incurred totaledof $120.9 million was essentially even with $120.5 million down 3% from $124.1 millionincurred in 2020, mainly due to both our lower average interest rate and lower average debt level.2021. All interest incurred during 20212022 and 20202021 was capitalized as the average amount of our inventory qualifying for interest capitalization was higher than our average debt level for each period. As a result, we had no interest expense for 20212022 or 2020.2021. Further information regarding our interest incurred and capitalized is provided in Note 6 – Inventories in the Notes to Consolidated Financial Statements in this report.

Our net order results for 2022 reflect the generally favorable 2022 first half housing market conditions and the significant weakening in the 2022 second half, as described above under “Overview.” Reflecting the considerable second-half housing market slowdown and our West Coast segment to 93% inprioritizing delivering our Southeast segment. The higher overall average selling price ofbacklog and protecting our margins over pursuing incremental gross orders, our net orders and net order value declined significantly on a year-over-year basis in 2021 largely reflected strong demandthe 2022 third quarter. The year-over-year decreases became more pronounced in mostthe 2022 fourth quarter, with net orders and net order value down 80% and 79%, respectively, from the year-earlier quarter and decreasing in each of our served marketsfour homebuilding reporting segments. In addition, our cancellation rate as well as producta percentage of gross orders rose sharply in the 2022 third quarter and geographic mix shifts of net orders.

As discussed above under Item 1 – Business in this report, the composition of our homes delivered, net orders and backlog shifts with the product and geographic mix of our active communities and the corresponding average selling prices of the homes ordered and/orand delivered at these communities in any particular period, and it changeschanging as new communities open and existing communities wind down or sell out.out in the ordinary course. In addition, with our Built-to-OrderBuilt to Order model, the selling prices of individual homes within a community may vary due to differing lot sizes and locations, home square footage, product premiums and optionthe design studio options and upgrade selections.upgrades buyers select in the community. These intrinsic

In addition to the results of our homebuilding reporting segments presented below, our consolidated homebuilding operating income includes the results of Corporate and other, a non-operating segment described in Note 2 – Segment

Information in the Notes to Consolidated Financial Statements in this report. Corporate and other had operating losses of $145.3 million in 2022, $148.9 million in 2021 and $107.2 million in 2020 and $104.1 million in 2019. The increase in 2021 as compared to 2020 reflected higher selling, general and administrative expenses, mainly due to higher costs associated with performance-based employee compensation plans, as well as expenses to support current operations and expected growth.2020.

With strong housing market conditions from the 2020 third quarter through the 2021 fourth quarter in most of our served markets, we delivered more homes at a higher overall average selling price and significantly expanded our homebuilding operating income as a percentage of revenues in each of our homebuilding segments for 2021, as compared to the previous year. The financial results for each of our homebuilding reporting segments for 2022 improved largely due to year-over-year increases in the year ended November 30, 2020average selling prices of homes delivered that reflected the favorable pricing and supply/demand environment in the 2022 first half and prior periods when most buyers contracted to purchase the homes delivered, as well as the product and geographic mix shifts of homes delivered. At the same time, results were negatively affected by the impacts from the onset of the COVID-19 pandemic,construction services and building material cost pressures, as discussed in Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in this reportwell as supply chain disruptions and other production-related challenges, as described above under “Overview.”