Business remains soft for Hovnanian Enterprises in the fourth quarter as the companys preliminary numbers report that the big builder delivered 3,969 homes during the quarter, a 19 percent decrease from the same period in 2006.
Net contracts were 2,781 homes for the fourth quarter, a decrease of 10 percent from a year ago, and fourth quarter cancellations were at 40 percent, up from 35 percent for both the third and fourth quarter of 2006.
The company said in a press release that the reason for the increased cancellation rate is the tightening of mortgage underwriting standards, which has led to some home buyers canceling contracts because they can't obtain loans.
Following the strategy of most big builders, Hovnanian continues to focus on its cash flow, reducing debt by $390 million in the fourth quarter. The company said it will release complete financial results for the fourth quarter ending Oct. 31, 2007, after the stock exchange closes on Dec. 18.