Two home builders report further financial woes
Hovnanian and Beazer Homes -- two of the nation’s largest home builders -- have reported more negative financial news.
For the quarter ended July 31, Hovnanian reported a loss of $80.5 million, compared with a profit of $74.4 million a year earlier. Sales tumbled 27 percent to $1.1 billion.
The Red Bank, N.J.-based company warned that conditions in most of the regions it operates in remain challenging, suggesting the housing market slump is far from over.
"Buyer psychology has been negatively impacted by a steady stream of news related to falling housing prices, foreclosure rates and mortgage availability," said CEO Ara Hovnanian. "We expect the current challenging environment to persist through most of 2008."
Hovnanian's results included a charge of $108.6 million related to land impairments and write-offs. Even with the negative report, Hovnanian's shares rose in post-bell trading because the results met Wall Street expectations.
Meanwhile, Atlanta-based Beazer announced Friday that on Sept. 6 it received purported default notices from U.S. Bank National Association, the trustee governing five of Beazer's outstanding senior notes due between May 2011 and June 2016.
The notices claim Beazer is in default because it has not yet filed its third-quarter report with the Securities and Exchange Commission.
The notices further allege that these defaults will become official "events of default" if not remedied in 60 days. Beazer said the notices of default are invalid.
Beazer announced in August it would delay filing its third-quarter report because of a continuing internal investigation by an audit committee of the company's board of directors.