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.