• Net income of $1.14 per diluted share, up 11.8 percent from $1.02 (excluding a secondary marketing trading loss) in the year-ago quarter.
• Backlog totaling $2.03 billion at quarter-end, up $283.3 million from a year ago. Backlog ratio of 215% at quarter-end compared to 190% a year ago.
• Sale of Kaufman and Broad Multi-Housing Group, Inc., generating cash of approximately $85 million.
• New joint venture with American CityVista to build residential housing in metropolitan areas.
• Repurchase of 4 million shares from Lewis shareholders.

Net income in the third quarter was $44.6 million, or $1.14 per diluted share, a third quarter earnings per share record for the Company. This compared favorably with third quarter 1999 net income of $38.2 million, or $.78 per diluted share, which included a pretax secondary market trading loss of $18.2 million in August 1999 related to the Company's mortgage banking subsidiary. Excluding the impact of the trading loss, diluted earnings per share for the third quarter of 1999 were $1.02.

Earnings per share for the quarter ended August 31, 2000 benefited from a decrease in selling, general and administrative expenses, a lower effective tax rate and a nearly 20 percent reduction in the number of diluted average shares outstanding as a result of the Company's share repurchase program. Total revenues for the quarter were $981.0 million compared to $1.06 billion a year ago.

Net income for the nine-month period ended August 31, 2000 was $136.6 million, or $3.32 per diluted share compared to $94.8 million, or $1.97 per diluted share in the year-ago period (excluding the secondary marketing trading loss recorded in the third quarter of 1999). The nine-month results for 2000 include a one-time gain of $39.6 million or $.97 per share resulting from the issuance of stock by the Company's French subsidiary in an initial public offering. Excluding this gain, net income for the nine months ended August 31, 2000 totaled $96.9 million, or $2.35 per share. Total revenues for the nine-month period of 2000 were $2.69 billion, compared to $2.61 billion in the year-ago period. Unit deliveries for the nine months ended August 31, 2000 totaled 15,317, compared to 15,521 units in the year-earlier period.

"Our KB2000 operating model, unique in our industry, continues to drive our performance," stated Bruce Karatz, chairman and chief executive officer. "I am particularly pleased that we were able to lower SG&A expenses, despite incurring transition costs related to our various consolidation programs. With our current strong backlog levels and proven operating disciplines in place, we are on track to end fiscal 2000 with another EPS record."

Deliveries in the third quarter of 2000 totaled 5,710 units versus 6,103 units a year ago. On a comparative basis, the decrease in units delivered is primarily attributable to two factors: the Company closed out some communities in California that were not replaced in the third quarter of 2000; and deliveries in France in the 1999 period were spurred by a special tax benefit to homebuyers. While the Company's California operations remain strong, the Company has chosen to be more selective in its investments in California and to diversify by opening communities in additional high-growth markets outside the state.

Net orders in the third quarter of 2000 totaled 5,357, compared to 5,347 in the year-ago quarter. Backlog at the end of the third quarter was 12,114 units, or $2.03 billion, compared to 10,809 units, or $1.75 billion in the year-ago quarter, a unit increase of 12.1 percent and a 16.2 percent increase in dollar value. At the end of the third quarter, the backlog ratio (defined as the ratio of beginning backlog to deliveries in the succeeding quarter) stood at approximately 215 percent, compared to approximately 190 percent a year earlier. The quarter-end backlog ratio exceeded management's target of 200 percent for the first time in the Company's history.

"With the performance we have delivered to date in 2000 and the strength of our financial position and backlog, I am optimistic regarding 2001," Mr. Karatz noted. "We are in carefully selected high-growth regions, with the objective of capturing a leadership role in each. Within our markets, we combine an intimate knowledge of our prospective homebuyers with custom-style choices that enhance our profitability, and employ an even-flow production schedule to smooth delivery cycles and protect us in a downturn.

"Provided economic factors remain stable, I am hopeful that several factors will propel us to record-breaking earnings per share in 2001. These include: higher targeted gross margins, lower SG&A expenses, a lower tax rate and significantly fewer shares outstanding. We have seen margin improvements with each subsequent quarter this year, proving that the operating imperatives of the KB2000 operating model are continuing to work."

At the end of the third quarter, the Company's debt to total capitalization was 53.1 percent, and remained flat against the prior year. The Company has kept its leverage ratio within its targeted range of 45 to 55 percent while executing stock repurchases of more than $200 million through August 31, 2000. The Company's asset repositioning program has enabled it to generate cash and manage debt levels by monetizing certain non-core assets.

In connection with this program, at the outset of the third quarter of 2000, the Company completed the sale of Kaufman and Broad Multi-Housing Group, Inc. which generated net proceeds of approximately $85 million. Cash raised from asset repositioning initiatives since January 2000 has been used to reduce debt and buy back stock. The Company continues to seek acquisition opportunities that fit its financial and operational criteria, as well.

As previously announced, shortly after the third quarter closed, the Company purchased 4.0 million shares of common stock that it issued in the January 1999 acquisition of Lewis Homes. The Company now has completed the purchase of all 14.5 million shares of common stock previously authorized for repurchase by its Board of Directors. Randall Lewis remains a director of the Company, and the Lewis shareholders continue to own approximately 3.9 million shares of the Company's common stock.

In August, the Company announced that it has formed American CityVista, a joint venture with Henry Cisneros, former president of Univision Communications and former Secretary of the U.S. Department of Housing and Urban Development, who is now also a director of Kaufman and Broad. American CityVista will develop distinctive communities in areas where new residential development has not occurred in recent years.

American CityVista, working with Kaufman and Broad, will identify sites, plan neighborhoods, acquire and develop land, build homes and market them as competitively-priced 'villages within cities' that are wired for technology and designed to honor local tastes and traditions. "As cities focus on revitalization, we will develop areas that have been overlooked by major homebuilders in the past," Mr. Karatz commented. "Meeting the tremendous demand for homes in central neighborhoods, or 'in-fill housing,' by providing residential options for buyers of all backgrounds and incomes is good for us, it's good for the communities, and it's great for those who wish to achieve the American dream of homeownership."

Except for the historical information contained herein, certain matters discussed in this press release are "forward- looking statements" as defined in the Private securities Litigation Reform Act of 1995, including any statements concerning future financial performance, business and prospects, and future Company actions and their expected results. These forward-looking statements are subject to risks, uncertainties and assumptions including, but not limited to, changes in general economic conditions, material prices, labor costs, interest rates, the secondary market for loans, consumer confidence, competition, currency exchange rates (insofar as they affect the Company’s operations in France and Mexico ), environmental factors, government regulations affecting the Company’s operations, the availability and cost of land in desirable areas, unanticipated violations of Company policy, unanticipated legal proceedings, and conditions in the capital, credit and homebuilding markets. See the Company’s Annual Report on Form 10-K and its Annual Report to Shareholders for the year ended November 30, 1999 and its other filings for a further discussion of these and other risks and uncertainties applicable to the Company’s business.

# # #

(Tables Follow)

KAUFMAN AND BROAD HOME CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

For the Nine Months and Three Months Ended August 31, 2000 and 1999

(In Thousands, Except Per Share Amounts – Unaudited)

		Nine Months				Three Months
		2000		1999		2000		1999
Total revenues		$ 2,686,791		$ 2,613,526		$ 981,024		$ 1,057,113
Construction
Revenues		2,645,336		2,570,145		965,374		1,040,413
Costs and expenses		(2,478,212)		(2,411,652)		(889,493)		(959,210)
Operating income		167,124		158,493		75,881		81,203
Interest income		5,021		5,613		1,274		1,831
Interest expense, net of amounts capitalized		(22,327)		(20,167)		(9,145)		(7,141)
Minority interests		(20,941)		(21,075)		(8,417)		(8,605)
Equity in pretax income of unconsolidated joint ventures		2,253		585		763		638
Gain on issuance of French subsidiary stock		39,630		–		–		–
Construction pretax income		170,760		123,449		60,356		67,926
Mortgage banking:
Revenues:		15,901		13,369		5,062		5,079
Interest income		25,554		30,012		10,588		11,621
Other		41,455		43,381		15,650		16,700
Expenses:
Interest		(14,256)		(12,109)		(4,645)		(4,543)
General and administrative		(11,406)		(8,924)		(4,922)		(3,147)
Secondary marketing trading loss		–		(18,155)		–		(18,155)
Mortgage banking pretax income		15,793		4,193		6,083		(9,145)
Total pretax income		186,553		127,642		66,439		58,781
Income taxes		(50,000)		(44,700)		(21,800)		(20,600)
Net income		$ 136,553		$ 82,942		$ 44,639		$ 38,181
Basic earnings per share		$ 3.39		$ 1.77		$ 1.17		$ 0.80
Diluted earnings per share		$ 3.32		$ 1.73		$ 1.17		$ 0.80
Basic average shares outstanding		$ 40,240		$ 46,838		$ 38,267		$ 47,911
Diluted average shares outstanding		$ 40,240		$ 46,838		$ 38,267		$ 47,911

KAUFMAN AND BROAD HOME CORPORATION
CONSOLIDATED BALANCE SHEETS

(In Thousands – Unaudited)

		August 31, 2000		November 30, 1999		August 31, 1999
ASSETS
Construction:
Cash and cash equivalents		$ 31,379		$ 15,576		$ 14,974
Receivables		263,659		264,549		292,744
Inventories		1,758,298		1,521,265		1,716,163
Investments in unconsolidated joint ventures		23,392		21,290		20,311
Deferred income taxes		89,171		99,519		67,755
Goodwill		194,219		205,618		213,271
Other assets		98,935		86,259		96,883
		2,459,053		2,214,076		2,422,101
Mortgage banking:
Cash and cash equivalents		13,813		12,791		24,803
Receivables		353,839		433,156		368,057
Other assets		9,405		4,212		3,982
		377,057		450,159		396,842
Total assets		$ 31,379		$ 2,664,235		$ 2,664,235
LIABILITIES AND STOCKHOLDERS’ EQUITY
Construction:
Accounts payable		$ 371,756		$ 328,528		$ 308,767
Accrued expenses and other liabilities		200,336		222,855		230,758
Mortgages and notes payable		993,244		813,424		1,002,520
		1,565,336		1,364,807		1,542,045
Mortgage banking:
Accounts payable and accrued expenses		7,760		9,711		18,340
Notes payable		305,895		377,666		320,468
Collateralized mortgage obligations secured by mortgage-backed securities		31,246		36,219		38,510
		344,901		423,596		377,318
Minority interests		239,713		199,249		213,279
Stockholders’ equity		686,160		676,583		686,301
Total liabilities and stockholders’ equity		$ 2,836,110		$ 2,664,235		$ 2,818,943

KAUFMAN AND BROAD HOME CORPORATION
SUPPLEMENTAL INFORMATION

For the Nine Months and Three Months Ended August 31, 2000 and 1999

(Unaudited)

		Nine Months				Three Months
Construction Revenues:		2000		1999		2000		1999
Housing		$ 2,567,131		$ 2,544,581		$ 959,736		$ 1,019,993
Commercial		–		657		–		512
Land		78,205		24,907		5,638		19,908
Total		$ 2,645,336		$ 2,570,145		$ 965,374		$ 1,040,413

		Nine Months				Three Months
Costs and Expenses:		2000		1999		2000		1999
Construction and land costs		$ 2,149,342		2,085,016		775,106		836,497
Selling, general and administrative expenses		328,870		326,636		114,387		122,713
Total		$ 2,478,212		$ 2,411,652		$ 889,493		$ 959,210

		Nine Months				Three Months
Average Sales Prices:		2000		1999		2000		1999
California		$ 254,400		242,700		255,700		249,000
Other U.S.		134,800		128,800		134,500		130,800
Foreign		161,900		163,300		157,800		161,600
Total		$ 167,600		$ 163,900		$ 168,100		$ 167,100

		Nine Months				Three Months
Net Orders:		2000		1999		2000		1999
California		4,820		5,336		1,301		1,660
Other U.S.		11,681		10,889		3,492		3,177
Foreign		2,018		1,962		564		510
Total		18,519		18,187		5,357		5,347
Unconsolidated Joint Ventures:		338		–		102		–

		Nine Months				Three Months
Unit Deliveries:		2000		1999		2000		1999
California		3,779		4,258		1,444		1,629
Other U.S.		9,690		9,504		3,540		3,526
Foreign		1,848		1,759		726		948
Total		15,317		15,521		5,710		6,103
Unconsolidated Joint Ventures:		362		–		102		–

		August 31, 2000				August 31, 1999
Backlog Data:		Backlog Units		Backlog Value		Backlog Units		Backlog Value
California		2,920		$ 737,912		2,630		$ 631,823
Other U.S.		7,297		985,091		6,723		882,538
Foreign		1,898		310,240		1,456		235,544
Total		12,115		$ 2,033,243		10,809		$ 1,749,905
Unconsolidated Joint Ventures:		195		$ 35,880		–		$ –