New Jersey’s Biggest Homebuilder on the Rise

Hovnanian Enterprises, New Jersey’s largest homebuilder, earned about $1.10 a share to $1.25 a share in the fiscal first quarter on an 18% increase in home sales.Hovnanian posted net income of $81.5 million, or $1.25 a share, in the year-earlier quarter, on a 13% gain in homes sales. The preliminary results met or “slightly” exceeded its pershare forecast of $1.10 to $1.25, the Red Bank, N.J.-based company said yesterday in a statement. It didn’t provide net income for the quarter ended January 31.Orders are slowing for many American homebuilders as mortgage rates rise, making purchases more expensive, an analyst with Raymond James & Associates in St. Petersburg, Fla., Rick Murray, said.Toll Brothers, the no. 1 builder of luxury homes,said on February 1 that first-quarter orders plunged 29%.It said sales would rise as little as 4.9% this year, half its previous forecast.“The market is not as strong as it was a year ago because the affordability issue is taking a toll on demand for all the homebuilders,” Mr. Murray said.Still, Hovnanian’s orders rose 5.5% in the quarter, sending its shares up $2.08, or 4.5%, to $48.01 at 12:54 p.m. in New York Stock Exchange composite trading. Toll Brothers gained 4.6% and D.R. Horton, the largest American homebuilder, climbed 4.5%.Affordability probably will slip to a 16-year low in 2006 as mortgage rates increase, according to a February 7 forecast by the National Association of Realtors. New-home sales probably will fall 8.5% to 1.17 million this year from a record 1.28 million in 2005, making 2006 the third best year on record, the trade group said.The average U.S. rate for a 30-year fixed mortgage probably will climb to 6.9% by December, the real estate group said. In December 2005 the rate was 6.3%, according to Freddie Mac, the no. 2 American mortgage buyer.Hovnanian, the ninth-largest homebuilder by stock market value, was expected to earn $1.22 a share based on the average estimate of 11 analysts surveyed by Thomson Financial. Thomson didn’t disclose the basis for the estimates.House sales rose to 3,845 from 3,266 a year earlier. In the company’s fourth quarter 2005 contracts grew 28% from a year earlier.An analyst with UBS Investment Research, Margaret Whelan, lowered her estimate yesterday for Hovnanian’s fiscal 2006 per-share earnings to $8.40 from $8.50, citing the quarter’s “slower order growth.” The average of 11 estimates in a Thomson poll was $8.17.Market conditions are “somewhat slower” in California, Florida, Washington, D.C., and the Northeast than earlier in 2005 and 2004, Hovnanian said in the statement. In California orders dropped 37% in the quarter from a year earlier and in Arizona and Texas orders fell 11%, the builder said.

New Jersey’s Biggest Homebuilder on the Rise

New Jersey’s Biggest Homebuilder on the Rise

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