May 4 (Bloomberg) -- Hovnanian Enterprises Inc., the worst performing U.S. homebuilder stock, reported a wider second- quarter loss than earlier forecast and said the subprime mortgage crisis is exacerbating weakness in the home sales market. The shares fell 4 percent.

The loss excluding land charges for the three months ended April 30 was about 30 cents a share, the Red Bank, New Jersey- based company said today in a statement. It had predicted a loss of 5 cents to 20 cents a share. Including the charge, the loss may be 45 cents to 50 cents. Analysts in a Bloomberg survey projected a loss, excluding items, of 22 cents on average.

Hovnanian said today it will have a pretax expense of as much as $20 million to cut the value of its property and walk away from deposits on parcels of land it doesn't plan to buy. The company delivered 30 percent fewer homes last quarter than a year ago and saw ``exceptionally high cancellations'' in the Fort Myers-Cape Coral area of Florida.

``The adverse publicity surrounding the subprime market has further damaged home buyers' psychology, resulting in decreased demand and leading to continued use of sales incentives,'' Hovnanian said in the preliminary earnings statement.

Shares of Hovnanian slid 99 cents to $23.58 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has lost 30 percent this year, the worst performance among the 16 members in the Standard & Poor's Supercomposite Homebuilding Index. The company is the sixth-largest homebuilder by revenue.

Home Sales Fall

At least 50 mortgage lenders have halted operations, gone out of business or sought buyers in the last year amid rising borrower defaults. The crisis has led to tighter lending standards just as home prices are falling and made it more difficult for many buyers to enter the market.

Hovnanian delivered 3,196 homes during the quarter, compared with 4,555 a year earlier. Cancellations in the second quarter fell to 32 percent from 36 percent in the first quarter, the company said.

Net contracts for the quarter declined 21 percent to 3,116. Excluding Fort Myers-Cape Coral, the company's cancellation rate was 30 percent and net contracts dropped 17 percent.

Homebuilders' profit is falling as demand for new property has waned. Existing-home sales tumbled 8.4 percent in March. While the Commerce Department said March new home sales rose, builders have called the spring selling season disappointing.

Hovnanian will issue its full second-quarter earnings report on May 31.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

Last Updated: May 4, 2007 16:06 EDT