Tags: US | Earns | Hovnanian

Homebuilder Hovnanian Trims Loss But Sales Trend Disappoints

Thursday, 03 Jun 2010 07:49 AM

Hovnanian Enterprises Inc. said Wednesday it trimmed its loss in the fiscal second quarter as the homebuilder saw write-downs on land and other assets decline sharply versus a year ago.

Management said home prices remain stable in most of the company's markets, which has helped raise its profit margins and led to smaller write-downs.

The builder also saw a lower rate of cancellation on new home contracts than a year earlier.

"This stability in home prices gives us reason to believe that we are at or near the bottom of this cyclical housing downturn," said Ara Hovnanian, the builder's chairman and chief executive.

Still, the company's sales trends for the February-April period were less encouraging.

Signed contracts for new homes tumbled 17 percent during the quarter compared with the prior-year period, primarily because the builder has fewer communities open than it did back then. The comparison improves to merely flat when one excludes communities that are no longer open.

In addition, Hovnanian noted May contracts were coming in slower than a year ago, citing the loss of a homebuyer tax credit that helped stoke sales this spring, but expired April 30. The company has previously estimated that the tax credit boosted its sales by about 10 percent.

"Our slower pace of May net contracts seems to confirm that the tax credit helped pull some sales forward into earlier months this year," Hovnanian said.

Low mortgage interest rates and homebuyer tax credits have helped gin up sales and home orders for Hovnanian and other builders this spring.

In April, new home sales nationwide jumped 14.8 percent; in March, new home sales posted the biggest monthly increase in 47 years.

But now the federal tax credits have ended, and many experts anticipate sales to drop in the coming months. And high unemployment and job insecurities are keeping some buyers on the fence.

Regardless, Hovnanian and other builders have stepped up land acquisitions in recent months.

The builder, which has operations in 18 states, said it has bought or signed a contract for 7,100 land parcels in 98 communities since Jan. 31, 2009.

Management expects less than 10 percent of its completed sales this year will come from newly acquired communities.

Hovnanian, which is based in Red Bank, N.J., said it lost $28.6 million, or 36 cents a share, in the three months ended in April. That compares with a loss of $118.6 million, or $1.50 a share, in the prior-year period.

The company had land-related charges of $1.2 million, the lowest going back to the first quarter of 2005. It booked $310.2 million of charges in the same quarter last year.

Revenue dropped to $318.6 million from $398 million the year before.

Analysts surveyed by Thomson Reuters were expecting a loss of 64 cents a share on revenue of about $352 million.

Completed sales totaled 1,118 homes, down 19 percent from the same period last year.

The rate at which buyers canceled contracts fell to 17 percent from 24 percent in the prior-year period.

Shares in Hovnanian slipped 5 cents to $6.10 in after-hours trading, after the company issued its financial results. The stock added 18 cents, or 3 percent, to $6.15 in the regular session.

© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 
1Like our page
2Share
Headline
Hovnanian Enterprises Inc. said Wednesday it trimmed its loss in the fiscal second quarter as the homebuilder saw write-downs on land and other assets decline sharply versus a year ago.Management said home prices remain stable in most of the company's markets, which has...
US,Earns,Hovnanian
534
2010-49-03
Thursday, 03 Jun 2010 07:49 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved