915840--11/5/2010--BEAZER_HOMES_USA

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Our home sales and operating revenues could decline due to macro-economic and other factors outside of our control, such as changes in consumer confidence, declines in employment levels and increases in the quantity and decreases in the price of new homes and resale homes in the market. We are the subject of pending civil litigation which could require us to pay substantial damages or could otherwise have a material adverse effect on us. The failure to fulfill our obligations under the Deferred Prosecution Agreement (the DPA) with the United States Attorney (or related agreements) and the consent order with the SEC could have a material adverse effect on our operations. We are dependent on the services of certain key employees, and the loss of their services could hurt our business. Potential future downgrades of our credit ratings could adversely affect our access to capital and could otherwise have a material adverse effect on us. Our Senior Notes, revolving credit and letter of credit facilities, and certain other debt impose significant restrictions and obligations on us. Restrictions on our ability to borrow could adversely affect our liquidity. In addition, our substantial indebtedness could adversely affect our financial condition, limit our growth and make it more difficult for us to satisfy our debt obligations. A substantial increase in mortgage interest rates or unavailability of mortgage financing may reduce consumer demand for our homes. If we are unsuccessful in competing against our homebuilding competitors, our market share could decline or our growth could be impaired and, as a result, our financial results could suffer. Our financial condition, results of operations and stockholders equity may be adversely affected by any decrease in the value of our inventory, as well as by the associated carrying costs. We conduct certain of our operations through unconsolidated joint ventures with independent third parties in which we do not have a controlling interest and we can be adversely impacted by joint venture partners failure to fulfill their obligations. We may not be able to utilize all of our deferred tax assets. We could experience a reduction in home sales and revenues or reduced cash flows due to our inability to acquire land for our housing developments if we are unable to obtain reasonably priced financing to support our homebuilding activities. Our stock price is volatile and could further decline. The tax benefits of our pre-ownership change net operating loss carryforwards and any future recognized built-in losses in our assets will be substantially limited since we experienced an ownership change as defined in Section 382 of the Internal Revenue Code. We are subject to extensive government regulation which could cause us to incur significant liabilities or restrict our business activities. We may incur additional operating expenses due to compliance programs or fines, penalties and remediation costs pertaining to environmental regulations within our markets. We may be subject to significant potential liabilities as a result of construction defect, product liability and warranty claims made against us. Our operating expenses could increase if we are required to pay higher insurance premiums or litigation costs for various claims, which could cause our net income to decline. We are dependent on the continued availability and satisfactory performance of our subcontractors, which, if unavailable, could have a material adverse effect on our business. We experience fluctuations and variability in our operating results on a quarterly basis and, as a result, our historical performance may not be a meaningful indicator of future results. The occurrence of natural disasters could increase our operating expenses and reduce our revenues and cash flows. Future terrorist attacks against the United States or increased domestic or international instability could have an adverse effect on our operations.

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915840--11/5/2010--BEAZER_HOMES_USA_INC