Hovnanian Reports Fiscal 2007 Third Quarter Results

RED BANK, N.J., Sept. 6 /PRNewswire-FirstCall/ -- Hovnanian Enterprises, Inc.(NYSE:HOV), a leading national homebuilder, reported a net loss of $80.5 million, after tax, or $1.27 per common share for the third quarter ended July 31, 2007. For the nine-month period ended July 31, 2007, revenues declined 22.6% to $3.4 billion, from $4.4 billion in the year earlier period. The Company reported a net loss of $168.5 million for the first nine months of 2007, or $2.67 per common share, compared to net income of $256.8 million, or $3.95 per fully diluted common share, in the same period a year ago.

For the nine month period, the Company incurred a total of $184.4 million of pretax charges related to land impairments and write-offs of predevelopment costs and land deposits, and $55.1 million of charges related to the impairment of intangibles.

Homebuilding gross margin, before interest expense included in cost of sales, was 15.9% for the third quarter of fiscal 2007, compared with 23.4% in the prior year's third quarter. The Company's pretax income from Financial Services in the third quarter of fiscal 2007 declined 19.3% over the same period in 2006, to $6.1 million.

The Company had 449 active selling communities on July 31, 2007, excluding unconsolidated joint ventures, compared with 436 active communities at the end of the same period last year. The Company's contract cancellation rate, excluding unconsolidated joint ventures, for the third quarter of fiscal 2007 was 35%, compared with the rate of 33% reported in the third quarter of 2006, and a rate of 32% for the second quarter of fiscal 2007.

Comments From Management

"Conditions in most of our markets remain challenging," commented Ara K. Hovnanian, President and Chief Executive Officer of the Company. "Credit tightening in the mortgage market has reduced the number of qualified home buyers, existing home inventory levels remain persistently high in many of our markets and buyer psychology has been negatively impacted by a steady stream of news related to falling housing prices, foreclosure rates, and mortgage availability. In light of these negative influences, our sales pace fell further in many of our communities, and we reacted by offering further price concessions and incentives. This created additional downward pressure on profit margins and led to additional land-related charges in the quarter."

"Overall negative sentiment toward the purchase of a new home continues to weigh on our net contract results," Mr. Hovnanian said. "Since the end of our third quarter, the tightening of lending standards in the mortgage market has extended beyond the sub prime market and is now impacting jumbo mortgages and further tightening of Alt-A loan underwriting standards. This is leading to a further reduction in the universe of qualified buyers for our homes. However, our mortgage operation continues to close a significant volume of mortgages on a daily basis for our homebuyers, and these loans are continuing to be placed with our regular base of investors, which are some of the world's largest financial institutions."

"While the housing market is definitely in a slump, we are still selling homes," Mr. Hovnanian said. "Despite difficult conditions, we sold 2,539 homes in the quarter and delivered 3,179 quality homes with a sales value in excess of $1 billion. We remain vigilant in running the day-to-day business, while adhering to our long term strategies. However, inventory reduction and cash flow are our foremost priorities. Our objective is to generate cash and pay down our debt to levels in line with our current volume of activity in our communities," Mr. Hovnanian stated.

"As of July 31, 2007, we had 46,747 lots controlled under option contracts and an additional 32,576 lots owned. This total land position of 79,323 lots represents a 31% decline from the end of the third quarter of fiscal 2006," said J. Larry Sorsby, Executive Vice President and Chief Financial Officer. "Our owned lot position is down 11% from the year earlier period and we expect it to continue to decline. We only move forward in taking down additional lots when the terms have been successfully renegotiated to where they make compelling economic sense for us. If markets do continue to soften further, we have additional flexibility to reduce our investment in land more rapidly and reduce additional cash expenditures, by walking away from a greater number of our lot options."

"We are extremely focused on strengthening our balance sheet during this challenging business environment," Mr. Sorsby continued. "We have already discharged our 10-1/2% notes that mature in October by putting the cash required to retire the bonds in escrow with the Trustee of the bonds. Unless market conditions deteriorate further, we project adequate room to operate under our debt covenants and thus we are not currently making any requests for modifications to our $1.5 billion unsecured revolving credit facility," Mr. Sorsby stated.

"The conditions leading into this housing downturn are different from those we have seen in past slowdowns throughout the 48 years that we have been in the business," Mr. Hovnanian said. "But the steps that we are taking to address the slowdown are similar. We are concentrating on reducing overhead expenses, and controlling land and land development spending, primarily through the decisions to renegotiate or walk away from options," Mr. Hovnanian said. "We expect the current challenging environment to persist through most of 2008. However, we have confidence in our long-term strategies to position our Company for the time when markets begin to stabilize and then subsequently show signs of recovery," Mr. Hovnanian concluded.

Hovnanian Enterprises will webcast its third quarter financial results conference call at 11:00 a.m. E.T. on Friday, September 7, 2007, hosted by Ara K. Hovnanian, President and Chief Executive Officer of the Company. The webcast can be accessed live through the "Investor Relations" section of Hovnanian Enterprises' Web site at http://www.khov.com/ . For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the "Audio Archives" section of the Investor Relations page on the Hovnanian Web site at http://www.khov.com/ . The archive will be available for 12 months.

About Hovnanian Enterprises

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes.

Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company's 2006 annual report, can be accessed through the "Investor Relations" section of Hovnanian Enterprises' website at http://www.khov.com/ . To be added to Hovnanian's investor e-mail or fax lists, please send an e-mail to IR@khov.com or sign up at http://www.khov.com/ .

Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America ("PHBCA") ( http://www.phbca.org/ ), a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States.

Non-GAAP Financial Measures:

Consolidated earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") and before inventory impairment loss and land option write-offs ("Adjusted EBITDA") are not generally accepted accounting principle (GAAP) financial measures. The most directly comparable GAAP financial measure is net income. The reconciliation of EBITDA and Adjusted EBITDA to net income is presented in a table attached to this earnings release.

Cash flow is non-GAAP financial measure. The most directly comparable GAAP financial measure is Cash Flow from Operating Activities. The Company uses cash flow to mean cash flow from operating activities and cash flow from investing activities excluding changes in mortgage notes receivable at the mortgage company.

Note: All statements in this Press Release that are not historical facts should be considered as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and business conditions, (2) adverse weather conditions and natural disasters, (3) changes in market conditions, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness, (12) utility shortages and outages or rate fluctuations, (13) geopolitical risks, terrorist acts and other acts of war and (14) other factors described in detail in the Company's Form 10-K for the year ended October 31, 2006.

                        (Financial Tables Follow)  Hovnanian Enterprises, Inc.  July 31, 2007  Statements of Consolidated Operations  (Dollars in Thousands, Except Per Share)                            Three Months Ended,       Nine Months Ended,                                  July 31,                  July 31,                          -----------------------   -----------------------                             2007         2006         2007         2006                          ----------   ----------   ----------   ----------                                (Unaudited)               (Unaudited)  Total Revenues          $1,130,593   $1,550,519   $3,407,052   $4,402,632  Costs and Expenses(a)    1,253,987    1,426,403    3,638,313    3,997,814  (Loss) Income from   Unconsolidated Joint   Ventures                   (2,739)      (3,239)      (2,934)      13,833                          ----------   ----------   ----------   ----------  (Loss) Income Before   Income Taxes             (126,133)     120,877     (234,195)     418,651  Income Tax (Benefit)   Provision                 (48,274)      43,830      (73,669)     153,859                          ----------   ----------   ----------   ----------  Net (Loss) Income          (77,859)      77,047     (160,526)     264,792                          ----------   ----------   ----------   ----------  Less: Preferred Stock   Dividends                   2,668        2,668        8,006        8,006                          -------------------------------------------------  Net (Loss) Income   Available to Common   Stockholders             $(80,527)     $74,379    $(168,532)     256,786                          =================================================  Per Share Data:   Basic:     (Loss) Income per      common share            $(1.27)       $1.18       $(2.67)       $4.09     Weighted Average      Number of Common      Shares Outstanding      63,199       62,804       63,036       62,843   Assuming Dilution:     (Loss) Income per      common share            $(1.27)       $1.15       $(2.67)       $3.95     Weighted Average      Number of Common      Shares Outstanding(b)   63,199       64,460       63,036       64,989  (a) Includes inventory impairment loss and land option write-offs.  (b) For the periods with a net loss, basic shares are used in accordance      with GAAP rules.  Hovnanian Enterprises, Inc.  July 31, 2007  Gross Margin  (Dollars in Thousands)                        Homebuilding Gross Margin  Homebuilding Gross Margin                            Three Months Ended        Nine Months Ended                                  July 31,                  July 31,                          -----------------------   -----------------------                             2007         2006         2007         2006                          ----------   ----------   ----------   ----------                                (Unaudited)               (Unaudited)  Sale of Homes           $1,079,226   $1,499,826   $3,273,156   $4,225,571  Cost of Sales,   excluding interest(a)     907,699    1,148,530    2,724,965    3,203,882                          ----------   ----------   ----------   ----------  Homebuilding Gross   Margin, excluding   interest                  171,527      351,296      548,191    1,021,689  Homebuilding Cost of   Sales interest             29,833       25,551       85,227       61,523                          ----------   ----------   ----------   ----------  Homebuilding Gross   Margin, including   interest                 $141,694     $325,745     $462,964     $960,166                          ==========   ==========   ==========   ==========  Gross Margin Percentage,      15.9%        23.4%        16.7%        24.2%   excluding interest  Gross Margin Percentage,      13.1%        21.7%        14.1%        22.7%   including interest                         Land Sales Gross Margin    Land Sales Gross Margin                            Three Months Ended        Nine Months Ended                                  July 31,                  July 31,                          -----------------------   -----------------------                             2007         2006         2007         2006                          ----------   ----------   ----------   ----------                                (Unaudited)               (Unaudited)  Land Sales                 $30,554      $23,045      $65,848     $103,838  Cost of Sales,   excluding interest(a)      30,566       21,742       51,085       81,376                          ----------   ----------   ----------   ----------  Land Sales Gross Margin,   excluding interest            (12)       1,303       14,763       22,462  Land Sales interest             24           50          258          930                          ----------   ----------   ----------   ----------  Land Sales Gross Margin,   including interest           $(36)      $1,253      $14,505      $21,532                          ==========   ==========   ==========   ==========  (a) Does not include cost associated with walking away from land options      which are recorded as inventory impairment losses in the Statements of      Consolidated Operations.  Hovnanian Enterprises, Inc.  July 31, 2007  Reconciliation of Adjusted EBITDA to Net (Loss) Income  (Dollars in Thousands)                              Three Months Ended      Nine Months Ended                                   July 31,                July 31,                             --------------------   ---------------------                               2007        2006        2007        2006                             --------    --------   ---------    --------                                  (Unaudited)             (Unaudited)  Net (Loss) Income          $(77,859)    $77,047   $(160,526)   $264,792  Income Tax (Benefit)   Provision                  (48,274)     43,830     (73,669)    153,859  Interest expense             31,017      26,250      94,531      64,622                             --------    --------    --------    --------      EBIT(1)                 (95,116)    147,127    (139,664)    483,273  Depreciation                  4,557       4,269      13,529      10,588  Amortization of   Debt Costs                     701         644       2,073       1,653  Amortization of   Intangibles                 10,150      13,331      78,424      38,391                             --------    --------    --------    --------      EBITDA(2)               (79,708)    165,371     (45,638)    533,905  Inventory Impairment Loss   and Land Option   Write-offs                 108,593      12,274     184,420      20,978                             --------    --------    --------    --------      Adjusted EBITDA(3)      $28,885    $177,645    $138,782    $554,883                             ========    ========    ========    ========  INTEREST INCURRED           $49,487     $41,515    $148,285    $108,569  ADJUSTED EBITDA TO   INTEREST INCURRED             0.58        4.28        0.94        5.11  (1) EBIT is a non-GAAP financial measure. The comparable GAAP financial      measure is net income. EBIT represents earnings before interest      expense and income taxes.  (2) EBITDA is a non-GAAP financial measure. The comparable GAAP      financial measure is net income. EBITDA represents earnings before      interest expense, income taxes, depreciation and amortization.  (3) Adjusted EBITDA is a non-GAAP financial measure. The comparable GAAP      financial measure is net income. Adjusted EBITDA represents earnings      before interest expense, income taxes, depreciation, amortization and      inventory impairment loss and land option write-offs.  Hovnanian Enterprises, Inc.  July 31, 2007  Interest Incurred, Expensed and Capitalized  (Dollars in Thousands)                               Three Months Ended       Nine Months Ended                                    July 31,                 July 31,                              --------------------     --------------------                                2007        2006         2007        2006                              --------    --------     --------    --------                                   (Unaudited)              (Unaudited)  Interest Capitalized at   Beginning of Period        $138,133     $77,048     $102,849     $48,366  Plus Interest Incurred        49,487      41,515      148,285     108,569  Less Interest Expensed        31,017      26,250       94,531      64,622                              --------    --------    ---------    --------  Interest Capitalized   at End of Period           $156,603     $92,313     $156,603     $92,313                              ========    ========    =========    ========               HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES                  CONDENSED CONSOLIDATED BALANCE SHEETS                   (In Thousands Except Share Amounts)                                               July 31,        October 31,                                                 2007              2006                                              ----------        ----------  ASSETS                                             (unaudited)  Homebuilding:    Cash and cash equivalents                    $19,631           $43,635                                              ----------        ----------    Restricted cash                               10,995             9,479                                              ----------        ----------    Inventories - at the lower of cost     or fair value: Sold and unsold homes     and lots under development                3,445,731         3,297,766                                              ----------        ----------    Land and land options held for     future development or sale                  299,154           362,760                                              ----------        ----------    Consolidated inventory not owned:      Specific performance options                15,072            20,340      Variable interest entities                 173,894           208,167      Other options                              181,344           181,808                                              ----------        ----------      Total consolidated inventory       not owned                                 370,310           410,315                                              ----------        ----------      Total inventories                        4,115,195         4,070,841                                              ----------        ----------    Investments in and advances to     unconsolidated joint ventures               205,249           212,581                                              ----------        ----------    Receivables, deposits, and notes              94,371            94,750                                              ----------        ----------    Property, plant, and equipment - net         110,556           110,704                                              ----------        ----------    Prepaid expenses and other assets            182,865           175,603                                              ----------        ----------    Goodwill                                      32,658            32,658                                              ----------        ----------    Definite life intangibles                     61,665           165,053                                              ----------        ----------      Total homebuilding                       4,833,185         4,915,304                                              ----------        ----------  Financial services:    Cash and cash equivalents                      9,961            10,688    Restricted cash                               11,281             1,585    Mortgage loans held for sale                 162,699           281,958    Other assets                                   6,162            10,686                                              ----------        ----------      Total financial services                   190,103           304,917                                              ----------        ----------  Income taxes receivable - including   deferred tax benefits                         339,474           259,814                                              ----------        ----------  Total assets                                $5,362,762        $5,480,035                                              ==========        ==========               HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES                  CONDENSED CONSOLIDATED BALANCE SHEETS                   (In Thousands Except Share Amounts)                                                    July 31,    October 31,                                                      2007         2006                                                   ----------   ----------  LIABILITIES AND STOCKHOLDERS' EQUITY             (unaudited)  Homebuilding:    Nonrecourse land mortgages                         $7,367      $26,088    Accounts payable and other liabilities            439,813      582,393    Customers' deposits                                93,496      184,943    Nonrecourse mortgages secured by operating     Properties                                        23,164       23,684    Liabilities from inventory not owned              228,077      205,067                                                   ----------   ----------      Total homebuilding                              791,917    1,022,175                                                   ----------   ----------  Financial services:    Accounts payable and other liabilities             18,180       12,158    Mortgage warehouse line of credit                 149,990      270,171                                                   ----------   ----------      Total financial services                        168,170      282,329                                                   ----------   ----------  Notes payable:    Revolving credit agreements                       456,275    Senior notes                                    1,650,628    1,649,778    Senior subordinated notes                         400,000      400,000    Accrued interest                                   26,983       51,105                                                   ----------   ----------      Total notes payable                           2,533,886    2,100,883                                                   ----------   ----------  Total liabilities                                 3,493,973    3,405,387                                                   ----------   ----------  Minority interest from inventory not owned           81,679      130,221                                                   ----------   ----------  Minority interest from consolidated joint   ventures                                             1,376        2,264                                                   ----------   ----------  Stockholders' equity:    Preferred stock, $.01 par value-authorized     100,000 shares; issued 5,600 shares at     July 31, 2007 and at October 31, 2006 with     a liquidation preference of $140,000             135,299      135,299    Common stock, Class A, $.01 par     value-authorized 200,000,000 shares; issued     59,251,891 shares at July 31, 2007 and     58,653,723 shares at October 31, 2006     (including 11,694,720 shares at July 31, 2007     and 11,494,720 shares at October 31, 2006     held in Treasury)                                    593          587    Common stock, Class B, $.01 par value     (convertible to Class A at time of sale)     authorized 30,000,000 shares; issued     15,338,840 shares at July 31, 2007 and     15,343,410 shares at October 31, 2006     (including 691,748 shares at July 31, 2007     and October 31, 2006 held in Treasury)               153          153    Paid in capital - common stock                    271,668      253,262    Retained earnings                               1,493,278    1,661,810    Treasury stock - at cost                         (115,257)    (108,948)                                                   ----------   ----------      Total stockholders' equity                    1,785,734    1,942,163                                                   ----------   ----------  Total liabilities and stockholders' equity       $5,362,762   $5,480,035                                                   ==========   ==========               HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                   (In Thousands Except Per Share Data)                               (Unaudited)                              Three Months Ended       Nine Months Ended                                   July 31,                  July 31,                           -------------------------------------------------                              2007         2006         2007         2006                           ----------   ----------   ----------   ----------  Revenues:    Homebuilding:      Sale of homes        $1,079,226   $1,499,826   $3,273,156   $4,225,571      Land sales and       other revenues          34,107       28,032       77,205      113,947                           ----------   ----------   ----------   ----------        Total         homebuilding       1,113,333    1,527,858    3,350,361    4,339,518    Financial services         17,260       22,661       56,691       63,114                           ----------   ----------   ----------   ----------        Total revenues      1,130,593    1,550,519    3,407,052    4,402,632                           ----------   ----------   ----------   ----------  Expenses:    Homebuilding:      Cost of sales,       excluding interest     938,265    1,170,272    2,776,050    3,285,258      Cost of sales interest   29,857       25,601       85,485       62,453      Inventory impairment       loss and land option       write-offs             108,593       12,274      184,420       20,978                           ----------   ----------   ----------   ----------        Total cost of         sales              1,076,715    1,208,147    3,045,955    3,368,689    Selling, general and     administrative           132,025      154,050      401,804      441,137                           ----------   ----------   ----------   ----------        Total homebuilding  1,208,740    1,362,197    3,447,759    3,809,826    Financial services         11,179       15,127       35,877       43,174    Corporate general and     administrative            22,128       26,744       64,319       80,377    Other interest              1,160          649        9,046        2,169    Other operations              630        8,355        2,888       23,877    Intangible amortization    10,150       13,331       78,424       38,391                           ----------   ----------   ----------   ----------        Total expenses      1,253,987    1,426,403    3,638,313    3,997,814                           ----------   ----------   ----------   ----------  (Loss) income from   unconsolidated joint   ventures                    (2,739)      (3,239)      (2,934)      13,833                           ----------   ----------   ----------   ----------  (Loss) income before   income taxes              (126,133)     120,877     (234,195)     418,651                           ----------   ----------   ----------   ----------  State and federal income   tax (benefit)/provision:    State                       1,370       (3,897)         118        7,212    Federal                   (49,644)      47,727      (73,787)     146,647                           ----------   ----------   ----------   ----------        Total taxes           (48,274)      43,830      (73,669)     153,859                           ----------   ----------   ----------   ----------  Net (loss) income           (77,859)      77,047     (160,526)     264,792  Less: preferred stock   dividends                    2,668        2,668        8,006        8,006                           ----------   ----------   ----------   ----------  Net (loss) income available   to common stockholders    $(80,527)     $74,379    $(168,532)    $256,786                           ==========   ==========   ==========   ==========  Per share data:  Basic:    (Loss) income per     common share              $(1.27)       $1.18       $(2.67)       $4.09    Weighted average number     of common shares     outstanding               63,199       62,804       63,036       62,843  Assuming dilution:    (Loss) income per     common share              $(1.27)       $1.15       $(2.67)       $3.95    Weighted average number     of common shares     outstanding               63,199       64,460       63,036       64,989  HOVNANIAN ENTERPRISES, INC.  (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)  (UNAUDITED)                                Communities Under Development                                   Three Months - 7/31/07                         Net Contracts(1)                 Deliveries                        Three Months Ended            Three Months Ended                             July 31,                      July 31,                    2007       2006   % Change    2007       2006   % Change  Northeast      Homes            408        452   (9.7%)       485        526   (7.8%)      Dollars      206,103    209,477   (1.6%)   238,299    234,231    1.7%      Avg. Price   505,154    463,445    9.0%    491,338    445,306   10.3%  Mid-Atlantic      Homes            268        408  (34.3%)       459        430    6.7%      Dollars      126,269    190,857  (33.8%)   215,363    222,653   (3.3%)      Avg. Price   471,153    467,787    0.7%    469,200    517,798   (9.4%)  Southeast      Homes            307        650  (52.8%)       597      1,600  (62.7%)      Dollars       88,253    179,896  (50.9%)   164,111    394,759  (58.4%)      Avg. Price   287,470    276,763    3.9%    274,893    246,724  (11.4%)  Southwest      Homes            924        945   (2.2%)       861      1,022  (15.8%)      Dollars      201,579    199,492    1.0%    196,681    220,211  (10.7%)      Avg. Price   218,159    211,103    3.3%    228,433    215,471    6.0%  Midwest      Homes            239        243   (1.6%)       290        195   48.7%      Dollars       52,386     43,396   20.7%     65,563     52,019   26.0%      Avg. Price   219,190    178,584   22.7%    226,079    266,764  (15.3%)  West      Homes            393        651  (39.6%)       487        850  (42.7%)      Dollars      145,295    271,904  (46.6%)   199,209    375,953  (47.0%)      Avg. Price   369,707    417,671  (11.5%)   409,053    442,298   (7.5%)  Consolidated   Total      Homes          2,539      3,349  (24.2%)     3,179      4,623  (31.2%)      Dollars      819,885  1,095,022  (25.1%) 1,079,226  1,499,826  (28.0%)      Avg. Price   322,916    326,970   (1.2%)   339,486    324,427    4.6%  Unconsolidated   Joint Ventures      Homes            255        249    2.4%        329        498  (33.9%)      Dollars       96,435     85,228   13.1%    117,898    189,287  (37.7%)      Avg. Price   378,175    342,281   10.5%    358,354    380,094   (5.7%)  Total      Homes          2,794      3,598  (22.3%)     3,508      5,121  (31.5%)      Dollars      916,320  1,180,250  (22.4%) 1,197,124  1,689,113  (29.1%)      Avg. Price   327,960    328,029   (0.0%)   341,256    329,840   (3.5%)                                  Contract Backlog                                      July 31,                           2007         2006      % Change  Northeast      Homes                 1,066        1,591     (33.0%)      Dollars             571,495      746,480     (23.4%)      Avg. Price          536,112      469,189      14.3%  Mid-Atlantic      Homes                 1,015        1,456     (30.3%)      Dollars             497,697      729,483     (31.8%)      Avg. Price          490,342      501,019      (2.1%)  Southeast      Homes                 2,437        4,315     (43.5%)      Dollars             702,385    1,221,462     (42.5%)      Avg. Price          288,217      283,073       1.8%  Southwest      Homes                 1,129        1,329     (15.0%)      Dollars             255,498      300,375     (14.9%)      Avg. Price          226,305      226,016       0.1%  Midwest      Homes                   762          658      15.8%      Dollars             157,594      115,747      36.2%      Avg. Price          206,816      175,907      17.6%  West      Homes                   717          964     (25.6%)      Dollars             299,153      490,893     (39.1%)      Avg. Price          417,229      509,225     (18.1%)  Consolidated   Total      Homes                 7,126       10,313     (30.9%)      Dollars           2,483,822    3,604,440     (31.1%)      Avg. Price          348,558      349,505      (0.3%)  Unconsolidated   Joint Ventures      Homes                   737        1,548     (52.4%)      Dollars             352,265      706,057     (50.1%)      Avg. Price          477,971      456,109       4.8%  Total      Homes                 7,863       11,861     (33.7%)      Dollars           2,836,087    4,310,497     (34.2%)      Avg. Price          360,688      363,418       0.8%  DELIVERIES INCLUDE EXTRAS  Notes:  (1) Net contracts are defined as new contracts signed during the period      for the purchase of homes, less cancellations of prior contracts.  HOVNANIAN ENTERPRISES, INC.  (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)  (UNAUDITED)                                Communities Under Development                                   Nine Months - 7/31/2007                         Net Contracts(1)                Deliveries                        Nine Months Ended             Nine Months Ended                             July 31,                      July 31,                    2007       2006   % Change    2007       2006   % Change  Northeast      Homes          1,202      1,413  (14.9%)     1,354      1,405   (3.6%)      Dollars      584,035    629,854   (7.3%)   637,437    634,358    0.5%      Avg. Price   485,886    445,757    9.0%    470,781    451,500    4.3%  Mid-Atlantic      Homes          1,212      1,375  (11.9%)     1,331      1,300    2.4%      Dollars      558,393    688,002  (18.8%)   627,421    671,543   (6.6%)      Avg. Price

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