Homebuilder Hovnanian Sees Narrower Loss

Red Bank, NJ, Sept. 3, 2009--Homebuilder Hovnanian Enterprises Inc. on Wednesday said its quarterly loss narrowed, but it was still larger than Wall Street had expected.

Hovnanian reported a third-quarter loss of $168.9 million, or $2.16 per share, compared with a loss of $202.5 million, or $2.67 per share, a year ago.

To adjust to the housing slump, Hovnanian has reduced the number of developments it builds. Excluding unconsolidated joint ventures, Hovnanian sold homes located in 198 communities, down 44 percent from 354 communities in the year-earlier quarter.

Total revenue fell 46 percent to $387.1 million from $716.5 million a year ago.

During the quarter, Hovnanian sold 1,322 homes, excluding unconsolidated joint ventures, down 39 percent from the third quarter a year-earlier. The average price of a home sold fell 12.4 percent to $277,716.

The number of new contracts, which are not included in revenue, fell 9 percent in the quarter to 1,442 homes. The value of the new contracts declined 14.2 percent to $386.6 million, while the average price of home under contract was down 5.7 percent. Net contracts per development rose 62 percent to 7.3 per community.

Still, Hovnanian warned demand could retreat in coming months as tax credits -- $8,000 for federal taxes and a $10,000 credit in California -- expire and continued rising unemployment takes its toll on buyers' sentiment.