Hovnanian’s Contracts and Deliveries Fall

Red Bank NJ, November 6, 2007--Home builder Hovnanian said its fourth-quarter net contracts and home deliveries fell, while cancellations rose amid the housing market's decline.

The company also said the sales pace in most of its markets "significantly deteriorated" when compared with recent months.

Tighter credit standards brought on by defaults in the subprime mortgage market, a glut of homes for sale and buyer concern about economic weakness have home builders scrambling to strengthen their balance sheets to weather the market decline, which began more than 18 months ago.

Hovnanian said preliminary fourth-quarter results showed net contracts fell 10% to 2,781 homes, while deliveries slid 19%to 3,969 homes.

The figures for both exclude home deliveries from unconsolidated joint ventures.

The company said cancellations for the quarter that ended October 31, were 40% of gross contracts, up from 35% in the previous quarter as well as the year-ago quarter.

Hovnanian blamed the higher cancellation rate on the inability of some customers to obtain loans due to the tightening of mortgage underwriting standards.

The company said its contract backlog at the end of October, excluding unconsolidated joint ventures, was 5,938 homes, down 30% from last year.

The company said t was focusing on shoring up its balance sheet and cash flow.

It said it cut debt by $390 million in the fourth quarter, retired the remaining $140 million of its $150 million 10-1/2 percent senior notes and reduced the amount drawn under its $1.5 billion unsecured revolving credit facility by $250 million to $206 million.