Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, reported a third-quarter loss that was bigger than analysts expected as sales fell following the expiration of a homebuyer tax credit.
The net loss narrowed to $72.9 million, or 92 cents a share, for the three months ended July 31 from $168.9 million, or $2.16, a year earlier, the Red Bank-based company said in a statement yesterday. The average estimate of seven analysts in a Bloomberg survey was for a loss of about 50 cents a share.
Orders declined after the government stopped offering a homebuyer tax credit worth as much as $8,000 on April 30, Chairman and Chief Executive Officer Ara Hovnanian said in the statement. Persistent unemployment and sagging consumer confidence also hurt orders, he said.
“Job creation is the key to a housing recovery, which makes it difficult to predict how improvements in the economy and housing market play out over the short term,” Hovnanian said.
Hovnanian’s revenue fell to $380.6 million from $387.1 million a year earlier. Net orders dropped 37 percent to 902 homes.
PulteGroup Inc., Toll Brothers Inc. and D.R. Horton Inc., three other U.S. homebuilders, reported profits for their most recent quarters, helped by cost cuts and tax benefits.
“Hovnanian waited longer than most of peers to lower its costs and to start lowering its debt,” Vicki Bryan, a debt analyst with New York-based Gimme Credit LLC, said before the results were announced. “And it’s feeling the consequences.”
The company had $492.4 million in cash as of July 31, down $29.8 million from the previous quarter, according to yesterday’s statement. Hovnanian spent $19.3 million to reduce debt and $70.3 million to purchase about 1,300 lots.
Hovnanian in March reported its first quarterly profit since 2006 because of a change in the tax code that provided builders with higher benefits.
The company reported earnings after the close of regular U.S. trading. Hovnanian shares have fallen 54 percent in New York Stock Exchange Composite trading since reaching a 19-month peak of $7.99 on May 3. The Standard & Poor’s Supercomposite Homebuilding Index fell 29 percent during that time.