Strong double-digit growth in contracts and deliveries in the 2024 fiscal year helped drive better-than-expected financial results for the full year at Hovnanian Enterprises.
Contracts increased 16% compared to the prior fiscal year to 6,007 while deliveries grew 12% to 6,151 in fiscal 2024, according to the president and CEO Ara Hovnanian. In the fiscal fourth quarter, contracts increased to 1,571 homes from 1,065 homes in the fourth quarter of 2023.
“The 48% increase in total fourth quarter contracts followed by the 55% increase in November demonstrates that consumer demand remains strong despite high mortgage rates and geopolitical and economic uncertainty, which persisted throughout this period,” Hovnanian said. “We adjusted our balance of pace versus price during the quarter. To spur consumers to action and to help them qualify for mortgages, we offered additional incentives, particularly in the West.”
Hovnanian said incentives were 8.5% of the average sales price in the fourth quarter, a 120 basis point increase compared to the fourth quarter of 2023. Moving forward, Hovnanian said elevated incentive levels and the home builder’s land light position will compress gross margins. However, the builder remains focused on pace over price as it enters the 2025 fiscal year.
Contracts per community increased 25.3% year-over-year to 10.4 in the fiscal fourth quarter. The pace was slightly above Hovnanian’s historical fourth quarter average of 8.8 contracts per community.
Total revenues in the fiscal fourth quarter, ended Oct. 31, increased 10.4% to $979.6 million. For the full year, revenue increased 9.0% to $3.0 billion. Home sales revenue increased 11.8% to $927.5 million in the fourth quarter while full-year home sales revenue increased 9.3% to $2.88 billion. The home builder’s cancellation rate was 18% in the fiscal fourth quarter, an improvement from 25% in the fourth quarter of 2023.
Hovnanian ended the fiscal year with 130 active selling communities, a 15.0% increase compared to the 2023 fiscal year. The company’s backlog value increased 11.7% to $936.8 million compared to the prior-year period.
Hovnanian allocated $318.4 million to land and land development spending in the fiscal fourth quarter, a 45.0% increase compared to the same quarter in 2023. For the full fiscal year, the home builder’s land and land development spend increased 46.5% to $995.4 million. At year’s end, Hovnanian’s total controlled consolidated lots were 41,891, an increase of 32.0% from fiscal 2023.
“After several years of focusing on debt reduction, we shifted our focus in fiscal 2024 to a strategy with growth as the focal point. As evidence of our commitment to growth, during fiscal 2024 our land and land development spend increased 47% year-over-year, lot count grew 32% year-over-year, and community count increased 14% year-over-year,” Hovnanian said. “Given the growth in our lot count, community count, and land and land development spend, we think we are well positioned to drive delivery growth in excess of 10% on an annual basis over the next few years.”
The builder generated a profit of $94.3 million, or $12.79 per share, for the fiscal fourth quarter, slightly down from a profit of $97.3 million, or $13.05 per share, in the same period in 2023. For fiscal 2024, Hovnanaian reported full-year fiscal profits of $242.0 million, or $31.79 per share, up from $205.9 million, or $26.88 per share, in fiscal 2023.
