GO
Loading...

CNBC Exclusive: Hovnanian Sees Housing Hitting Bottom in '07

In an exclusive interview on CNBC, Hovnanian Enterprises Chief Executive Ara Hovnanian said he doesn't expect the housing market has hit bottom yet.

“There is reason for optimism that we’ll see the bottom in the beginning of ’07,” Hovnanian said on "Squawk Box."

The homebuilder said Monday that $315 million in land-related charges led to a quarterly loss in a weak U.S. housing market.

For the fiscal fourth quarter ended Oct. 31, Hovnanian posted a net loss of $117.9 million, or $1.88 per share, compared with a profit of $165.4 million, or $2.53 per share a year earlier. Revenues fell to $1.7 billion from $1.8 billion.

The executive said it is not surprising to see a slowing trend in housing starts in recent months. He expects cancellations of new house orders to continue to “tweak up” a little bit and then begin to level off into the second quarter.

“Remember, the comparison periods are going to start getting easier now since the slowdown began over a year ago,” he said.

Hovnanian’s own company is currently facing its biggest challenges in Southern Florida and the Californian coastal markets.

“Those are the markets that had the best appreciation, and the greatest margins and returns, and they are going through a correction right now,” he said.

Hovnanian expects the slowing housing market to hurt the overall economy, but he expects that this time around a slowing economy will still be a growing economy.

“This slowdown is a little unusual in that job growth is good, the economy is good, interest rates are very good,” he said. Hovnanian also noted that resale listings have begun to level off in some markets.

Hovnanian said it incurred $336 million of charges related to inventory impairments and land option write-offs in all of 2006, including $315 million in the fourth quarter.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video

  • Art Cashin, UBS director of floor operations, looks at how the markets are reacting to Janet Yellen's views on progress in the labor market. Cashin explains why he is now going to pay more attention to Vice Chair Stanley Fischer.

  • Discussing when the Fed should raise rates, and the significance of the Fed's structural versus cyclical debate, with former Dallas Fed President Robert McTeer. McTeer says Janet Yellen needs to put more emphasis on what's happening to productivity.

  • Discussing monetary policy and Janet Yellen's comments coming out of Jackson Hole, with David Spika, The Westwood Funds senior vice president, and Andrew Burkly, Oppenheimer managing director.