Hovnanian says net contracts and sales fall

Orders and sales for new homes fell and cancellations rose at upscale U.S. home builder Hovnanian Enterprises Inc (HOV.N) during the company's fiscal fourth quarter. The company said on Tuesday that the October sales pace in most of its markets "significantly deteriorated" when compared with recent months and that set by its September promotional sale. Hovnanian's problems reflect the U.S. housing industry's protracted decline, as it was the first major builder to include October results in its preliminary accounts. Shares of Hovnanian were off nearly 4 percent in early afternoon trading on the New York Stock Exchange touching a new intraday low of $9.70.

Hovnanian said preliminary results for the fiscal fourth-quarter ended October 31, showed that excluding unconsolidated joint ventures, net contracts fell 10 percent to 2,781 homes, while sales slid 19 percent to 3,969 homes. Would-be buyers canceled contracts at a rate of 40 percent, as many found themselves unable to qualify for mortgages. The cancellation rate rose from 35 percent in the prior quarter as well as the year-earlier quarter. Other home builders, such as Beazer Homes USA Inc (BZH.N), also blamed high cancellation rates on tighter mortgage requirements as a result of the subprime mortgage market meltdown. A glut of homes for sale and buyer concern about economic weakness have home builders scrambling to strengthen their balance sheets to weather the market decline, which began more than 18 months ago.

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source: updatere.com