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Shares of

Hovnanian Enterprises

(HOV) - Get Hovnanian Enterprises, Inc. Class A Report

fell after the homebuilder said net contracts in June rose 3.2% from a year ago.

The Red Bank, N.J.-based company said net contracts hit 1,282 in the month compared with the year-ago period, even though there was one less weekend in the month this year.

The number of contracts fell sharply in the Northeast, down 25.2% from a year-ago. Both the Southeast and Southwest regions saw increases of 18% or more, but the company acknowledged that net contracts there included the effects of acquisitions.

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Net contracts in June increased 12.7% on a dollar basis to $383.7 million.

Shares fell $1.11, or 3.2%, to $33.90, well of their 52-week high of $48.48.

In its statement, the company made no mention of interest rates, which are significantly higher than three months ago, when it first became evident that the


was likely to raise interest rates at the beginning of the summer, not the end of it. The central bank, in fact, hiked rates 25 basis points last week, the first increase in four years.

Mortgage rates on 15-year and 30-year mortgages -- which are based on the yield of the Treasury's ten-year note -- are up more than 100 basis points, or one full percentage point, since their March low.

With operations in 14 states, Hovnanian is one of the nation's largest homebuilders.