Hovnanian Slashes Estimates

Hovnanian Enterprises (HOV Quote - Cramer on HOV - Stock Picks) has joined the list of homebuilders who have already signaled that the slowdown in the housing market has indeed arrived.

The company said Friday that it expects earnings for the third quarter to be in the range of $1.10 to $1.20 a share, down from its previous guidance of $1.40 to $1.50 a share.

For the full year, Hovnanian cut its forecast even more dramatically, saying it will probably earn $5 to $5.75 a share instead of its prior estimate of $7.20 to $7.40 a share. The company expects to deliver between 19,600 and 20,500 homes this fiscal year, including 2,000 to 2,300 homes in unconsolidated joint ventures.

Analysts surveyed by Thomson Financial are looking for a quarterly profit of $1.41 and a full-year net of $6.46. Shares of Hovnanian were dropping $1.52, or 5.2%, to $28 in premarket trading.

Predicting a short-term financial performance in the current homebuilding market has become increasingly difficult, Ara Hovnanian, the president and CEO of Hovnanian, said in a statement.

"Our anticipated financial results for the remainder of 2006 continue to be negatively impacted by a slower sales pace, high cancellation rates on contracts in backlog that were projected to close this year, and more pronounced use of concessions and incentives, particularly on the resale of those homes which have experienced contract cancellations," he said.