Hovnanian Narrows Loss, Contracts Fall

RED BANK, N.J. (TheStreet) -- Hovnanian Enterprises(HOV) shares bid lower Wednesday morning after the homebuilder reported a double-digit drop in new-home contracts after the closing bell late Tuesday.

Hovnanian narrowed quarterly losses in its fiscal fourth quarter, ended Oct. 31 but said it sold 13% fewer homes in the period. Excluding joint ventures, it sold 1,078 homes, while completed sales fell almost 17% year-over-year to 1,204. The average price of its holds fell 12% to $261,530.

Hovnanian shares were 3.7% lower in premarket trading Wednesday.

The U.S. housing market continues to struggle and has been under tremendous pressure for some time. Demand fell further after the expiration of federal tax credits for homebuyers earlier this year, and continues to suffer amid high unemployment and foreclosures.

New-home sales are expected to have risen to an annualized rate of 300,000 in November though the figure has fallen four of the last six months.

Hovnanian's contract cancellation rates, excluding unconsolidated joint ventures, was flat year-over-year at 24%. Contract backlog at the end of its fiscal year, excluding unconsolidated joint ventures, was 1,249 homes with a sales value of $370.8 million, 30% and 34% lower, respectively, compared with year-earlier results.

"In spite of strong long-term demographics, the current housing market remains quite challenging," said CEO Ara K. Hovnanian. "The combination of a lackluster job market and high foreclosure activity is clearly having a dampening effect on the housing market. The only silver lining is that we continue to find land acquisition opportunities which we believe will yield appropriate returns at today's home prices and sales paces."

"Even without a general housing recovery, we are optimistic that as the percentage of deliveries from newly identified communities increases, our overall performance should continue to improve," the CEO added.

Quarterly revenue decreased 19.3% to $353 million, from $437.4 million in the fourth quarter last year.