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December 12, 2007
Hovnanian chief says Fed should have cut rates further, denies sale
speculation
BLOOMBERG NEWS SERVICE Red Bank-based Hovnanian Enterprises Inc. Chief
Executive Officer Ara Hovnanian said he is disappointed the Federal
Reserve didn't cut interest rates more and it's difficult to determine
if the housing market has hit bottom. "I would have hoped for a
little bolder move,'' Hovnanian said in an interview. "There's a lot
of fear and uncertainty, so I just think it would have been a good
step for psychology'' to cut rates more, he said.
Hovnanian said it's "hard to tell'' if the worst is over for housing,
and that December sales have improved. The company, the largest
homebuilder in New Jersey, has lost 75 percent of its market value
this year through Tuesday, making it the second-worst performer among
the 15 largest U.S. homebuilders.
The Federal Open Market Committee Tuesday lowered the benchmark rate
by a quarter-point to 4.25 percent, the third reduction since
September as the central bank tries to contain the subprime credit
crisis.
Homebuilders have lost $31 billion in market value this year. New home
sales fell 24 percent in October from a year ago and prices declined
for the first time since 1994.
The company is trying to weather the decline by trimming the inventory
of unsold homes and paying down $400 million in debt, Hovnanian said,
adding his bonus for the year "will be zero.''
"We have been through these kinds of cycles many times in our 50 year
history,'' he said. "We're trying to reduce overhead.''
Hovnanian denied investor speculation that Toll Brothers Inc., the
biggest U.S. luxury homebuilder, offered to buy the company.
"There is a new rumor every week. No, we're not for sale,'' Hovnanian
said.
The builder said on Nov. 6 that 40 percent of its customers canceled
contracts to buy homes in the fourth quarter as stricter lending
standards made it tougher to obtain mortgages.
The cancellation rate compared with 35 percent for the fourth quarter
of 2006. The company delivered 3,969 homes in the three months ended
Oct. 31, down 19 percent from a year ago, and net contracts fell 10
percent.
Hovnanian said last month that sales "seriously deteriorated'' in
October and blamed tighter home-loan underwriting. Today, he said
sales are improving.
"Things have definitely picked up in December,'' he said.
Hovnanian chief says Fed should have cut rates further, denies sale
speculation
BLOOMBERG NEWS SERVICE Red Bank-based Hovnanian Enterprises Inc. Chief
Executive Officer Ara Hovnanian said he is disappointed the Federal
Reserve didn't cut interest rates more and it's difficult to determine
if the housing market has hit bottom. "I would have hoped for a
little bolder move,'' Hovnanian said in an interview. "There's a lot
of fear and uncertainty, so I just think it would have been a good
step for psychology'' to cut rates more, he said.
Hovnanian said it's "hard to tell'' if the worst is over for housing,
and that December sales have improved. The company, the largest
homebuilder in New Jersey, has lost 75 percent of its market value
this year through Tuesday, making it the second-worst performer among
the 15 largest U.S. homebuilders.
The Federal Open Market Committee Tuesday lowered the benchmark rate
by a quarter-point to 4.25 percent, the third reduction since
September as the central bank tries to contain the subprime credit
crisis.
Homebuilders have lost $31 billion in market value this year. New home
sales fell 24 percent in October from a year ago and prices declined
for the first time since 1994.
The company is trying to weather the decline by trimming the inventory
of unsold homes and paying down $400 million in debt, Hovnanian said,
adding his bonus for the year "will be zero.''
"We have been through these kinds of cycles many times in our 50 year
history,'' he said. "We're trying to reduce overhead.''
Hovnanian denied investor speculation that Toll Brothers Inc., the
biggest U.S. luxury homebuilder, offered to buy the company.
"There is a new rumor every week. No, we're not for sale,'' Hovnanian
said.
The builder said on Nov. 6 that 40 percent of its customers canceled
contracts to buy homes in the fourth quarter as stricter lending
standards made it tougher to obtain mortgages.
The cancellation rate compared with 35 percent for the fourth quarter
of 2006. The company delivered 3,969 homes in the three months ended
Oct. 31, down 19 percent from a year ago, and net contracts fell 10
percent.
Hovnanian said last month that sales "seriously deteriorated'' in
October and blamed tighter home-loan underwriting. Today, he said
sales are improving.
"Things have definitely picked up in December,'' he said.