Hovnanian Enterprises this morning reported that net contracts fell 10% and deliveries dropped 19% during its fiscal fourth quarter compared to the same quarter last year.
For the quarter ended October 31, 2007, Hovnanian wrote contracts on 2,781 homes and delivered 3,969 homes, excluding unconsolidated joint ventures.The reporting period includes the company's "Deal of the Century" weekend sale Sept. 14-16, during which it reported preliminary gross sales of 2,130 homes. The company said that the sales pace in most of its markets "significantly deteriorated" in October from what it had been during previous months.
The cancellation rate for the quarter was 40%, up from 35% for both the third quarter of 2007 and the fourth quarter of 2006. Hovnanian said the increase was due to tighter lending standards and the inability of some buyers to qualify for a mortgage.
The company reduced its backlog by 30% from last year's fourth quarter, with5,938 homes in backlog at the end of October, excluding unconsolidated joint ventures.
The company also said it reduced its total debt by $390 million during the quarter, including the retirement of the remaining $140 million of its $150 million 10-1/2% senior notes and the reduction of the amount drawn under its $1.5 billion unsecured revolving credit facility by $250 million, from $456 million at July 31, 2007 to $206 million at October 31, 2007.
Hovnanian plans to report actual results after market close on Tuesday, December 18, followed by a conference call at 11:00 a.m. (ET) on December 19.