Hovnanian trims fiscal 4Q loss on smaller charges

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LOS ANGELES (AP) — Homebuilder Hovnanian Enterprises Inc. on Tuesday reported a narrower loss for its fiscal fourth quarter on smaller charges, but said new contracts dropped 13 percent as demand for homes slowed.

Management said the housing market remains challenging, citing a lackluster job market and high foreclosures, which have helped dampen home values.

The decline reflects weaker demand for homes this year in the months since a federal homebuyer tax credit ended in April. Since then, the market has cratered as many would-be homebuyers opt to stay on the sidelines, put off by high unemployment, tight credit and uncertainty about home prices.

Other large builders also have reported sharp annual declines in new home orders in recent months.

New home sales have fallen four times in the past six months, most recently in October. New home prices slid last month to the lowest point in seven years as many builders slashed prices to compete with the resale home market.

Hovnanian sold 1,078 homes in the August-October quarter, excluding joint ventures. Completed sales fell nearly 17 percent to 1,204, compared with a year earlier. The average sale price of its homes slipped 12 percent to $261,530.

New home contracts were weakest in the Northeast, where they were off 46 percent from the same period last year, and the West, where they fell 34.5 percent.

Hovnanian has been buying land and opening more communities where it’s selling homes. It’s banking on sales at these newer, more profitable communities to help it weather the softer housing demand.

“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,” said Ara Hovnanian, the builder’s chairman, president and chief executive.

Amid falling sales, the company whittled down the size of its loss primarily by booking smaller land-related write-downs versus a year ago.

For the three months ended Oct. 31, Hovnanian reported a loss of $132.1 million, or $1.68 a share. That compares with a loss of $250.8 million, or $3.21 a share, in the prior-year period.

The builder recorded $80.6 million in write-downs, down from $138 million in the prior-year quarter.

Revenue dropped 19 percent to $353 million from $437.4 million the year before.

Analysts polled by Thomson Reuters were expecting a loss of 66 cents a share on revenue of about $288.1 million.

Hovnanian ended its fiscal year with a profit of $2.6 million, or 3 cents a share, versus a loss of $716.7 million, or $9.16 a share, in fiscal 2009. Its fiscal 2010 results included a federal income tax benefit of $291.3 million.

Fiscal 2010 revenue fell to $1.4 billion from $1.6 billion the year before.

Hovnanian, which is based in Red Bank, N.J., has operations in 18 states and is one of the nation’s largest builders of senior housing communities.

Shares slipped 9 cents to $4.27 in aftermarket trading following the release of its financial results. Shares fell 5 cents to $4.36 during the regular session.

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