Hovnanian Spurs Home Sales
With Price Cuts of Up to 30%
By Mike Barris
>From The Wall Street Journal Online
A 72-hour promotion by Hovnanian Enterprises Inc. designed to
jump-start sagging home sales exceeded the company's expectations,
resulting in more than 2,100 gross sales, the homebuilder said.
The figure included more than 1,700 contracts and more than 400 sales
deposits. In its fiscal third quarter ended July 31, Hovnanian
recorded 2,539 signed contracts, excluding unconsolidated joint ventures.
President and Chief Executive Ara K. Hovnanian had said before the
sale started that he'd be "thrilled" to sell 700 or 800 homes.
"The high level of traffic we saw in our sales offices and models over
the weekend and over the past several weeks convinces us that there
are interested buyers in the market today," Mr. Hovnanian said.
"However, with all of the negative publicity about the housing market,
many homebuyers were hesitant to buy because they worried that even
lower prices might be offered later," he said.
The "Deal of the Century" promotion which ran from Friday through
Sunday promised "unprecedented savings" nationwide, largely on unsold
homes that were completed or under construction. The best deals
available were on the roughly 2,000 homes already started, Mr.
Hovnanian told Dow Jones Newswires last week.
On certain New Jersey and New York properties, buyers could save up to
$149,600, Mr. Hovnanian said. Borrowers, however, had to use the Red
Bank, N.J., company's lender and it was unclear which homes got that
discount.
In afternoon trading, Hovnanian shares were up 2.7%, or 29 cents, at
$11.29.
Industry experts said the weekend could show if price specials are
what it will take to get jittery buyers to sign the dotted line.
At the height of a boom fueled by low interest and generous credit
terms, builders profited from bidding wars. But, now, as a credit and
mortgage crisis sweeps the nation, foreclosure counts are skyrocketing
and lenders are either closing or tightening their requirements.
That's left home builders battling ballooning inventory and
cancellation rates.
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