RED BANK, NJ-Citing weakening residential market conditions, homebuilder Hovnanian Enterprises said yesterday that it would take a pretax charge of at least $90 million and as much as $110 million for its Q3 ended July 31, 2007. The charge is tied to land impairment and write-offs of predevelopment costs and land deposits in Q3, company officials say.
The charge comes "as a result of continued deterioration in sales pace and pricing in certain communities since the end of the company's second fiscal quarter," says a spokesman, in a prepared statement.
The basis for the move is that Hovnanian delivered 3,179 homes during its Q3, a drop of 31% from the same quarter a year earlier. Net contracts for the quarter came in at 2,539, a drop of 24% from a year earlier. Cancellations for Q3, meanwhile, were 35% of gross contracts, up slightly from a cancellation rate of 33% a year earlier. And the company's contract backlog came in at 7,126 homes, a drop of 31% from a year earlier.
The company spokesman termed the results "preliminary." Final Q3 results are expected to be ready on Sept. 6, and the company has slated a webcast for the next day.
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