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KB Home Vs. NVR: Battle Of The Builders

Mar. 26, 2023 10:25 AM ETKB Home (KBH), NVRDHI, LEN, LEN.B12 Comments
Allen Greathouse profile picture
Allen Greathouse


  • This is a strange time for homebuilders. Insatiable demands meet unaffordable financing.
  • That global fallout wreaked havoc on the share price of KB Home and NVR. In fact, KB Home has yet to recover to its pre-GFC high share price of ~$80.
  • Adjusted for population, the 2010s was the worst decade since before the 1960s for new single-family home construction in the USA.

Young couple talking about housing design with manual worker.

skynesher/E+ via Getty Images


"The rent is too damn high" - Jimmy McMillan

As a wise man once said the rent is indeed quite high... In fact, it is so high that rent growth has significantly outpaced inflation over the past

This article was written by

Allen Greathouse profile picture
Hi! My name is Allen Greathouse, I'm an MBA graduate and an avid hobbyist investor. I started investing when I turned 18 and have been investing for over 10 years. One small idea, of turning $1000 in my checking account into something more spurred a decade of continuous learning and growth. I share my research here on seeking alpha free of charge as I dive into a variety of companies, both small and large, and deep value as well as high growth. I consider myself a quality investor, looking to identify companies with endurable competitive advantages which I then dollar cost average into over time. Some of my favorite investors of all time include Warren Buffet, Chuck Akre, Terry Smith, Mark Leonard, and Chris Mayer. In my free time, you will likely find me playing sand volleyball, boating, or golfing.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in NVR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Please note that this article is for informational purposes only and should not be construed as investment advice. It is important to do your own research and consult with a financial advisor before making any investment decisions.

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Comments (12)

OverTheHorizon profile picture
CA homebuilder $KBH:

“LA-Orange County homebuying slumps 36% to slowest February on record”

“Homebuying’s slump in Los Angeles and Orange counties pushed sales down 36% in a year to the slowest February on record.“
OC Register March 29
@OverTheHorizon who knew? tough going?
Well, at least lumber is no longer over $1000, or even $1500! The latest quote was around $413.50.


I don't know how homebuilders were making any money during those times.
Allen Greathouse profile picture
@Qichar Most home builders lock in prices for supplies when the customer orders the house, this allows them to be hedged. I agree though, thank God lumber has declined.
NVR extremely pricey up here with no divvy....Wait until it drops under $4000 and it can happen when recession kicks in!!! Longz LEN! :-)
Thanks for the comparison.Enjoy your work. Two generally under the radar and Les followed large home builders that you might want to research are CCS and MHO. Both have advantages and disadvantages but MHO looks particularly attractive below TBV which has been well scrubbed.
Allen Greathouse profile picture
@moneymanag Interesting! When I have the time I’ll take a look at both, thanks for putting them on my radar. Have a great day!
Thank you @Allen Greathouse for this neat and tidy comparison. My understanding is that NVR is different from the other builders in that it doesn’t ‘inventorise’ land. NVR’s business model is therefore capital light compared to its competitors, hence its much higher ROIC.

I think the key issue is whether home building businesses will be able to find ways to solve or relieve the affordability constraints on the demand for new homes. If mortgage rates remain elevated they will have to. But I have no idea how they may go about it or who is best able to achieve that.
I am long NVR.
Allen Greathouse profile picture
@alwyns At a certain point I think it’s likely that their margins will need to decrease. They exploded upwards over the last few years. For now, they will probably try to avoid that at all costs.
i rate lennar class b shares the best long term investment in the space
Allen Greathouse profile picture
@old maid Why’s that?
@Allen Greathouse big discount to len, lower p/e, higher yield. lennar has many irons in the fire and is the class act in the group, imo.
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