Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, reported an unexpected profit for its fiscal second quarter as orders jumped 52 percent amid rising U.S. demand for new houses. The shares surged.
Net income for the three months ended April 30 was $1.8 million, or 2 cents a share, compared with a loss of $72.7 million, or 69 cents, a year earlier, the Red Bank, N.J.-based company said in a statement. The average estimate of nine analysts surveyed by Bloomberg was for a loss of 32 cents a share.
The profit was Hovnanian’s first after eight straight quarters of losses. U.S. homebuilders are reporting increased orders as job gains and record-low mortgage rates help lure buyers. Purchases of new homes in the U.S. rose 3.3 percent in April from the previous month to an annual pace of 343,000, the Commerce Department said May 23.
“The sales improvements we have experienced are fairly wide-based in terms of geography, price points and buyer profiles,” Chief Executive Officer Ara Hovnanian said in the statement. “We are encouraged that the homebuilding industry may be entering the early stages of a recovery.”
Hovnanian’s net contracts for the quarter jumped to 1,775 homes from 1,166 a year earlier, the company said. Revenue increased 34 percent to $341.7 million.
The company’s contract backlog, an indication of future sales, rose 48 percent from a year earlier to 2,298 homes. The cancellation rate was 17 percent, down from 20 percent in the second quarter of 2011.
The stock gained 16 percent to $1.96 at 10:12 a.m. in New York. It was the best performance in Bloomberg’s 13-member homebuilder index, which rose 4.1 percent.
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