Hovnanian (HOV - Cramer's Take - Stockpickr - Rating) reported a second-quarter loss and painted a bleak picture about the ongoing real estate slowdown, saying the housing market has gotten worse after showing signs of improvement earlier this year.
The Red Bank, N.J., homebuilder withdrew its full-year guidance because of the "increased uncertainty of housing market conditions."
For the quarter ended April 30, Hovnanian recorded a loss of $30.7 million, or 49 cents a share, compared with a year-earlier profit of $101 million, or $1.55 per share. The results were in line with management's previous guidance for a 50-cent loss.
Results were dragged down by $34.4 million of pretax charges related to land impairment and write-offs of predevelopment costs and land deposits. Such writedowns resulted from a continued decline in sales paces and general market conditions in many of the company's communities, Hovnanian said.
Total revenue decreased 29.4% to $1.1 billion in the second quarter. The number of net contracts for new sales, excluding unconsolidated joint ventures, tumbled 21.4% to 3,116 units.
"We are frustrated to report that the housing market has continued to slip further in many locations in terms of both sales pace and sales prices," CEO Ara K. Hovnanian said in a statement. "The housing market weakened in the latter part of the second quarter and the slower conditions have continued into May. Lower prices offered to buyers to close homes during the quarter also led to a further reduction in margins and a net loss for the quarter."
No guidance issued, a big loss for the quarter and a market that "has continued to slip further in many locations in terms of both sales pace and sales prices."
Simply put -- this report indicates housing isn't anywhere near a bottom.
