Hovnanian Enterprises Inc 10-Q for FY2026 Q2
Hovnanian Enterprises Inc (HOV)
About this 10-Q
Hovnanian Enterprises Inc filed this 10-Q on June 2, 2026, covering the quarter ended April 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended April 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $667.65M
- down 2.7% from $686.47M a year earlier
- Net loss
- $284K
- compared with net income of $19.73M a year earlier
- Diluted EPS
- -$0.46
- compared with $2.43 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
OR
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission file number
Hovnanian Enterprises, Inc. (Exact Name of Registrant as Specified in Its Charter)
N/A (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act: |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
N/A | ||
The |
(1)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☐ | Nonaccelerated Filer ☐ | Smaller Reporting Company | Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
1
FORM 10-Q
2
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
| April 30, 2026 |
| October 31, 2025 | ||
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ASSETS |
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Homebuilding: |
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Cash and cash equivalents | $ |
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Restricted cash and cash equivalents |
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Inventories: |
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Sold and unsold homes and lots under development |
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Land and land options held for future development or sale |
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Consolidated inventory not owned |
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Total inventories |
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Investments in and advances to unconsolidated joint ventures |
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Receivables, deposits and notes, net |
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Property and equipment, net |
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Goodwill |
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Deferred tax assets, net |
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Prepaid expenses and other assets |
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Total homebuilding |
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Financial services |
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Total assets | $ |
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LIABILITIES AND EQUITY |
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Homebuilding: |
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Nonrecourse mortgages secured by inventory, net of debt issuance costs | $ |
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Accounts payable and other liabilities |
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Customers’ deposits |
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Liabilities from inventory not owned, net of debt issuance costs |
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Senior notes and credit facilities (net of discounts, premiums and debt issuance costs) |
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Accrued interest |
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Total homebuilding |
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Financial services |
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Total liabilities |
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Equity: |
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Hovnanian Enterprises, Inc. stockholders' equity: |
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Preferred stock, $ |
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Common stock, Class A, $ |
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Common stock, Class B, $ |
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Paid in capital - common stock |
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Retained Earnings |
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Treasury stock - at cost – |
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Total Hovnanian Enterprises Inc. stockholders’ equity |
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Noncontrolling interest |
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Total equity |
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Total liabilities and equity | $ |
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See notes to condensed consolidated financial statements (unaudited).
3
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended April 30, |
| Six Months Ended April 30, | ||||||||
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Revenues: |
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Homebuilding: |
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Sale of homes | $ |
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Land sales and other revenues |
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Total homebuilding |
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Financial services |
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Total revenues |
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Expenses: |
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Homebuilding: |
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Cost of sales, excluding interest |
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Cost of sales interest |
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Inventory impairments and land option write-offs |
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Total cost of sales |
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Selling, general and administrative |
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Total homebuilding expenses |
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Financial services |
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Corporate general and administrative |
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Other interest |
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Other expense (income), net (1) |
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Total expenses |
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Gain on extinguishment of debt, net |
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(Loss) income from unconsolidated joint ventures |
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Income before income taxes |
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Provision for income taxes |
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Net (loss) income |
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Less: net (loss) income attributable to noncontrolling interest |
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Net (loss) income attributable to Hovnanian Enterprises, Inc. |
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Less: preferred stock dividends |
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Net (loss) income available to common stockholders | $ | ( |
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Per share data: |
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Basic: |
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Net (loss) income per common share | $ | ( |
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Weighted-average number of common shares outstanding |
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Assuming dilution: |
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Net (loss) income per common share | $ | ( |
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Weighted-average number of common shares outstanding |
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See notes to condensed consolidated financial statements (unaudited).
(1) Includes $
4
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
THREE AND SIX MONTH PERIODS ENDED APRIL 30, 2026
(In thousands, except share data)
(Unaudited)
| A Common Stock |
| B Common Stock |
| Preferred Stock |
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| Shares Issued and Outstanding |
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| Shares Issued and Outstanding |
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| Shares Issued and Outstanding |
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| Paid-In-Capital |
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| Retained Earnings |
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| Treasury Stock |
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| Noncontrolling Interest |
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| Total |
Balance, October 31, 2025 |
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Preferred dividend declared ($ |
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Restricted stock amortization, issuances and forfeitures |
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Conversion of Class B to Class A common stock |
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Changes in noncontrolling interest |
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Share repurchases | ( |
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Net income |
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Balance, January 31, 2026 |
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Stock options, amortization and issuances |
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Preferred dividend declared ($ |
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Restricted stock amortization, issuances and forfeitures |
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Conversion of Class B to Class A common stock |
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Changes in noncontrolling interest |
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Share repurchases | ( |
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Net (loss) |
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Balance, April 30, 2026 |
| $ |
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| $ |
| $ |
| $ |
| $ | ( |
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See notes to condensed consolidated financial statements (unaudited).
5
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
THREE AND SIX MONTH PERIODS ENDED APRIL 30, 2025
(In thousands, except share data)
(Unaudited)
| A Common Stock |
| B Common Stock |
| Preferred Stock |
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| Shares Issued and Outstanding |
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| Amount |
| Shares Issued and Outstanding |
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| Amount |
| Shares Issued and Outstanding |
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| Paid-In-Capital |
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| Retained Earnings |
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| Treasury Stock |
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| Total |
Balance, October 31, 2024 |
| $ |
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Stock options, amortization and issuances |
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Preferred dividend declared ($ |
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Restricted stock amortization, issuances and forfeitures |
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Conversion of Class B to Class A common stock |
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Share repurchases | ( |
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Net income |
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Balance, January 31, 2025 |
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Stock options, amortization and issuances |
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Preferred dividend declared ($ |
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Restricted stock amortization, issuances and forfeitures |
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Conversion of Class B to Class A common stock |
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Share repurchases | ( |
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Net income |
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Balance, April 30, 2025 |
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See notes to condensed consolidated financial statements (unaudited).
6
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended | ||||
| April 30, | ||||
| 2026 |
| 2025 | ||
Cash flows from operating activities: |
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Net income | $ |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Depreciation |
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Stock-based compensation |
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Amortization of debt discounts, premiums and deferred financing costs |
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Gain on sale of property and assets |
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Gain on consolidation of joint venture |
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Gain on assets contributed to joint venture |
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Income from unconsolidated joint ventures |
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Distributions of earnings from unconsolidated joint ventures |
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Gain on extinguishment of debt |
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Inventory impairments and land option write-offs |
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Decrease (increase) in assets: |
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Inventories |
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Receivables, deposits and notes |
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Origination of mortgage loans |
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Sale of mortgage loans |
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Deferred tax assets |
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(Decrease) increase in liabilities: |
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Accounts payable, accrued interest and other liabilities |
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Customers’ deposits |
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Net cash provided by (used in) operating activities |
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Cash flows from investing activities: |
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Proceeds from sale of property and assets |
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Purchase of property, equipment, and other fixed assets |
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Investment in and advances to unconsolidated joint ventures, net of reimbursements |
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Distributions of capital from unconsolidated joint ventures |
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Acquisitions of business, net of cash acquired |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Proceeds from mortgages and notes |
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Payments related to mortgages and notes |
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Proceeds from model sale leaseback financing programs |
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Payments related to model sale leaseback financing programs |
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Proceeds from land bank financing programs |
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Payments related to land bank financing programs |
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Net proceeds (payments) related to mortgage warehouse lines of credit |
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Payments related to senior notes, senior secured notes and senior unsecured term loan |
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Contributions from noncontrolling interest |
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Preferred dividends paid |
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Treasury stock purchases |
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Deferred financing costs from land banking financing programs and note issuances |
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Net cash used in financing activities |
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Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents |
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Cash and cash equivalents, and restricted cash and cash equivalents balance, beginning of period |
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Cash and cash equivalents, and restricted cash and cash equivalents balance, end of period | $ |
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Reconciliation of Cash, cash equivalents and restricted cash |
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Homebuilding: Cash and cash equivalents | $ |
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Homebuilding: Restricted cash and cash equivalents |
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Financial Services: Cash and cash equivalents, included in financial services assets |
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Financial Services: Restricted cash and cash equivalents, included in financial services assets |
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Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ |
| $ | | |
7
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands - Unaudited)
(Continued)
Supplemental disclosure of non-cash investing and financing activities:
In the first quarter of fiscal 2026, we consolidated the remaining assets and liabilities of
In the first quarter of fiscal 2026, we acquired a controlling financial interest in a previously unconsolidated joint venture in the Kingdom of Saudi Arabia ("KSA"). As part of the transaction, we consolidated the assets and liabilities of KSA, resulting in an increase of $
8
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. | Basis of Presentation |
Hovnanian Enterprises, Inc. (“HEI”) conducts all of its homebuilding and financial services operations through its subsidiaries (references herein to the “Company,” “we,” “us” or “our” refer to HEI and its consolidated subsidiaries and should be understood to reflect the consolidated business of HEI’s subsidiaries).
The accompanying unaudited Condensed Consolidated Financial Statements include HEI's accounts and those of all of its consolidated subsidiaries after elimination of all intercompany balances and transactions.
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025. In the opinion of management, all adjustments for interim periods presented have been made, which include normal recurring accruals and deferrals necessary for a fair presentation of our condensed consolidated financial position, results of operations and cash flows. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and these differences could have a significant impact on the Condensed Consolidated Financial Statements. Results for interim periods are not necessarily indicative of the results which might be expected for a full year.
2. | Stock Compensation |
During the first quarter of fiscal 2026, the Board of Directors (the "Board") approved certain grants under a new Long-Term Incentive Program (the "2026 LTIP") that contain performance-based vesting conditions. The performance period for the 2026 LTIP commenced on November 1, 2025 and will end on October 31, 2028. At the end of the performance period, approximately
For the three and six months ended April 30, 2026, stock-based compensation expense was $
9
3. | Interest |
Interest costs incurred, expensed and capitalized were as follows:
| Three Months Ended |
| Six Months Ended | ||||||||
| April 30, |
| April 30, | ||||||||
(In thousands) | 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Interest capitalized at beginning of period | $ |
| $ | |
| $ |
| $ | | ||
Plus interest incurred(1) |
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Less cost of sales interest expensed |
| ( |
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| ( |
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| ( |
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| ( |
Less other interest expensed(2) |
| ( |
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| ( |
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| ( |
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| ( |
Less interest contributed to unconsolidated joint ventures(3) |
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Plus interest acquired from unconsolidated joint ventures(4) |
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Interest capitalized at end of period(5) | $ |
| $ | |
| $ |
| $ | | ||
(1) | Amounts do not include interest incurred by our mortgage and finance subsidiaries. |
(2) | During the three and six months ended April 30, 2026 and 2025, respectively, our inventory under development exceeded our debt, therefore, all of the related interest incurred qualified for interest capitalization. Other interest includes interest on completed homes, land in planning and fully developed lots without homes under construction, which does not qualify for capitalization, and therefore, is expensed as incurred. |
(3) | Represents capitalized interest which was included as part of the assets contributed to joint ventures, as discussed in Note 18. There was no impact to the Condensed Consolidated Statement of Operations as a result of these capitalized interest transactions. |
(4) | Represents capitalized interest which was included as part of the assets acquired from joint ventures, as discussed in Note 18. There was no impact to the Condensed Consolidated Statement of Operations as a result of these capitalized interest transactions. |
(5) | Capitalized interest amounts are shown gross before allocating a portion of impairments, if any, to capitalized interest. |
10
4. | Reduction of Inventory to Fair Value |
We had
Write-offs of options, engineering and capitalized interest costs are recorded in "Inventory impairments and land option write-offs" when we redesign communities, abandon certain engineering costs or do not exercise options in various locations because the pro forma profitability is not projected to produce adequate returns on investment commensurate with the risk. Total aggregate write-offs related to these items were $
We sell and lease back certain of our model homes with the right to participate in the potential profit when each home is sold to a third-party at the end of the respective lease. As a result of our continued involvement and the ability to repurchase model homes with below market options, for accounting purposes in accordance with ASC 606, these sale and leaseback transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheets as of April 30, 2026 and October 31, 2025, included inventory of $
We have land banking arrangements, whereby we sell our land parcels to a land banker and they provide us an option to purchase back finished lots on a predetermined schedule. Because of our options to repurchase these parcels, for accounting purposes in accordance with ASC 606, these transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheets as of April 30, 2026 and October 31, 2025, included inventory of $
11
5. | Variable Interest Entities |
ASC 810 requires the assessment of whether an entity is a variable interest entity ("VIE") and, if so, if we are the primary beneficiary at the inception of the entity or at a reconsideration event. We are required to consolidate a VIE if we determine that we have a controlling financial interest in the VIE. Controlling financial interests will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Our variable interest in VIEs are in the form of joint ventures and land and lot option purchase contracts.
We examine specific criteria and use our judgment when determining if we are the primary beneficiary of a VIE and have a controlling financial interest. The significant factors we consider in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE's executive committee, existence of unilateral kick-out rights or voting rights, level of economic disproportionality between us and the other partner(s) and contracts to purchase property from the VIEs.
We also enter into land and lot option purchase contracts to procure land or lots for the construction of homes. Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms. Under the terms of the option purchase contracts, many of the option deposits are not refundable at the Company's discretion. Under the requirements of ASC 810, certain option purchase contracts may result in the creation of a VIE that owns the land parcel under option.
As a result of our analyses, we have concluded we are not the primary beneficiary and do not have a controlling financial interest of any of the land or lots under option purchase contracts at either April 30, 2026 or October 31, 2025.
As of April 30, 2026 and October 31, 2025, we had total cash deposits amounting to $
Our investments in homebuilding and land development joint ventures consist of equity interests that, in total, provide us with partner investment returns and management fees. All major decision making in our joint ventures is shared among all partner(s). In particular, business plans and budgets are generally required to be unanimously approved by all partner(s). Usually, management and other fees earned by us are nominal and believed to be at market and there is no significant economic disproportionality between us and our partner(s). As a result of our analyses, we have concluded we are not the primary beneficiary and do not have a controlling financial interest of any of our homebuilding and land development joint ventures at either April 30, 2026 or October 31, 2025.
6. | Warranty Costs |
We accrue for warranty costs that are covered under our existing general liability and construction defect policy as part of our general liability insurance deductible. For homes to be delivered in fiscal 2026 and previously delivered in 2025, our annual deductible under our general liability insurance is or was $
12
| Three Months Ended |
| Six Months Ended | ||||||||
| April 30, |
| April 30, | ||||||||
(In thousands) | 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Balance, beginning of period | $ |
| $ |
| $ |
| $ | ||||
Additions – Selling, general and administrative |
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Additions – Cost of sales |
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Charges incurred during the period |
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| ( |
Changes to pre-existing reserves (1) |
| ( |
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| ( |
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| ( | |
Balance, end of period | $ |
| $ |
| $ |
| $ | ||||
(1)
7. | Commitments and Contingent Liabilities |
We are involved in litigation, claims and other proceedings arising in the ordinary course of business. The significant majority of our litigation matters are related to construction defect claims. Our estimated losses from construction defect litigation matters, if any, are included in our construction defect reserves. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our financial position, results of operations or cash flows.
In December 2020, the New Jersey Department of Environmental Protection (“NJDEP”) and the Administrator of the New Jersey Spill Compensation Fund (the “Spill Fund”) filed a lawsuit in the Superior Court of New Jersey, Law Division, Union County against Hovnanian Enterprises, Inc., in addition to other unrelated parties, in connection with contamination at Hickory Manor, a residential condominium development. Alleged predecessors of certain defendants had used the Hickory Manor property for decades for manufacturing purposes. In 1998 (when one of our affiliates purchased the property and began conducting the remediation), NJDEP confirmed that groundwater at this site was impacted from an off-site source. The site was later remediated, resulting in the NJDEP issuing an unconditional site-wide No Further Action (“NFA”) determination letter and Covenant Not to Sue in 1999. Subsequently, one of our affiliates was involved in redeveloping the property as a residential community. The complaint asserts claims under the New Jersey Spill Act and other state law claims and alleges that the NJDEP and the Spill Fund have incurred over $
8. | Cash Equivalents, Restricted Cash and Customers' Deposits |
Cash equivalents include certificates of deposit, U.S. Treasury bills and government money–market funds with maturities of 90 days or less when purchased. Our cash balances are held at a few financial institutions and may, at times, exceed insurable amounts. We believe we help to mitigate this risk by depositing our cash in major high credit quality financial institutions. As of April 30, 2026 and October 31, 2025, $
Homebuilding "Restricted cash and cash equivalents" on the Condensed Consolidated Balance Sheets totaled $
13
Financial services restricted cash and cash equivalents, which are included in "Financial services" assets on the Condensed Consolidated Balance Sheets, totaled $
Homebuilding "Customers' deposits" are shown as a liability on the Condensed Consolidated Balance Sheets. These liabilities are significantly more than the applicable periods’ restricted cash balances because in some states the deposits are not restricted from use and, in other states, we are able to release the majority of these customer deposits to cash by pledging letters of credit or surety bonds.
9. | Leases |
We rent certain office space for use in our operations. Our lease population at April 30, 2026 is comprised of operating leases where we are the lessee, primarily for our corporate office and division offices.
Lease costs are included in our Condensed Consolidated Statements of Operations, primarily in "Selling, general and administrative" homebuilding expenses, and payments on our lease liabilities are presented in the table below.
| Three Months Ended |
| Six Months Ended | ||||||||
| April 30, |
| April 30, | ||||||||
(In thousands) | 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Operating lease costs | $ |
| $ |
| $ |
| $ | | |||
Cash payments on lease liabilities | $ |
| $ |
| $ |
| $ | | |||
Operating right-of-use lease assets ("ROU assets") are included in "" on our Condensed Consolidated Balance Sheets, while lease liabilities are included in "." During the six months ended April 30, 2026, we had an increase to ROU assets of $
(In thousands) | April 30, 2026 |
| October 31, 2025 |
| ||
ROU assets | $ |
| $ |
| ||
Lease liabilities | $ |
| $ |
| ||
Weighted-average remaining lease term (in years) |
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| ||
Weighted-average discount rate |
| % |
| % | ||
Maturities of our operating lease liabilities as of April 30, 2026 are as follows:
Fiscal Year Ending October 31, |
| (In thousands) |
2026 (excluding the six months ended April 30, 2026) | $ | |
2027 |
| |
2028 |
| |
2029 |
| |
2030 |
| |
2031 and thereafter |
| |
Total operating lease payments |
| |
Less: imputed interest |
| ( |
Present value of operating lease liabilities | $ |
14
10. | Mortgage Loans Held for Sale |
Our wholly owned mortgage banking subsidiary, K. Hovnanian American Mortgage, LLC (“K. Hovnanian Mortgage”), originates mortgage loans, primarily from the sale of our homes. Such mortgage loans and related servicing rights are generally sold in the secondary mortgage market within a short period of time from origination. Mortgage loans held for sale are collateralized by the underlying property. Loans held for sale are recorded at fair value with changes in the value recognized in the Condensed Consolidated Statements of Operations in “Financial services” revenue.
As of April 30, 2026 and October 31, 2025, $
The activity in our loan origination reserves during the three and six months ended April 30, 2026 and 2025 were as follows:
| Three Months Ended |
| Six Months Ended | ||||||||
| April 30, |
| April 30, | ||||||||
(In thousands) | 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Loan origination reserves, beginning of period | $ |
| $ |
| $ |
| $ | ||||
Provisions for estimated losses during the period |
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Payments/settlements |
| ( |
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| ( |
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| ( | |
Loan origination reserves, end of period | $ |
| $ |
| $ |
| $ | ||||
11. | Mortgages |
Nonrecourse
We had nonrecourse mortgage loans for certain communities totaling $
Mortgage Loans
K. Hovnanian Mortgage finances the origination of mortgage loans through various master repurchase agreements, which are recorded in "Financial services" liabilities on the Condensed Consolidated Balance Sheets.
Our secured Master Repurchase Agreement with JPMorgan Chase Bank, N.A. (“Chase Master Repurchase Agreement”), which was amended on March 24, 2026 to extend the maturity date to
K. Hovnanian Mortgage has another secured Master Repurchase Agreement with Customers Bank (“Customers Master Repurchase Agreement”) which was amended on March 4, 2026 to extend the maturity date to
K. Hovnanian Mortgage has another secured Master Repurchase Agreement with Hinsdale Bank & Trust Company, N.A. ("Hinsdale Master Repurchase Agreement") which is a short-term borrowing facility that provides up to $
15
K. Hovnanian Mortgage has another secured Master Repurchase Agreement with PlainsCapital Bank ("PlainsCapital Master Repurchase Agreement"), which is a short-term borrowing facility that was amended on May 1, 2026 to reduce the borrowing limit from $
The Chase Master Repurchase Agreement, Customers Master Repurchase Agreement, Hinsdale Master Repurchase Agreement and PlainsCapital Master Repurchase Agreement (together, the “Master Repurchase Agreements”) require K. Hovnanian Mortgage to satisfy and maintain specified financial ratios and other financial condition tests. Because of the extremely short period of time mortgages are held by K. Hovnanian Mortgage before the mortgages are sold to investors (generally a period of a few weeks), the immateriality to us on a consolidated basis, the size of the Master Repurchase Agreements, the levels required by these financial covenants, our ability based on our immediately available resources to contribute sufficient capital to cure any default, were such conditions to occur, and our right to cure any conditions of default based on the terms of the applicable agreement, we do not consider any of these covenants to be substantive or material. As of April 30, 2026, we believe we were in compliance with the covenants under the Master Repurchase Agreements.
12. | Senior Notes and Credit Facilities |
Senior notes and credit facilities balances as of April 30, 2026 and October 31, 2025, were as follows:
(In thousands) | April 30, 2026 |
| October 31, 2025 | ||
Senior Notes: |
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$ |
| $ | |||
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| |||
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Total Senior Notes | $ |
| $ | ||
Senior Secured Revolving Credit Facility(1) | $ |
| $ | ||
Subtotal senior notes and credit facilities | $ |
| $ | ||
Net (discounts) premiums | $ | ( |
| $ | ( |
Unamortized debt issuance costs | $ | ( |
| $ | ( |
Total senior notes and credit facilities, net of discounts, premiums and unamortized debt issuance costs | $ |
| $ | ||
(1)
General
Except for K. Hovnanian, the issuer of the notes and borrower under the credit agreement governing our secured revolving credit facility (the “Secured Credit Facility”), our home mortgage subsidiaries, certain of our title insurance subsidiaries, joint ventures and subsidiaries holding interests in our joint ventures, we and each of our subsidiaries are guarantors of the Secured Credit Facility and senior notes outstanding at April 30, 2026 (collectively, the “Notes Guarantors”).
16
The credit agreement governing the Secured Credit Facility and the indentures governing the senior notes (together, the "Debt Instruments") outstanding at April 30, 2026, do not contain any financial maintenance covenants, but do contain restrictive covenants that limit, among other things, the ability of HEI and certain of its subsidiaries, including K. Hovnanian, to incur (including through exchanges or certain other types of transactions) indebtedness, pay dividends and make distributions on common and preferred stock, repay/repurchase certain indebtedness prior to its respective stated maturity, repurchase common and preferred stock, make other restricted payments (including investments), sell certain assets (including in certain land banking transactions), incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets and enter into certain transactions with affiliates. The Debt Instruments also contain customary events of default which would permit the lenders or holders thereof to exercise remedies with respect to the collateral (as applicable), declare the loans (the “Secured Revolving Loans”) made under the Credit Agreement, dated as of October 31, 2019, as amended, by and among K. Hovnanian, the Company, the other guarantors party thereto, Wilmington Trust, National Association, as administrative agent, and the lenders party thereto (the "Secured Credit Agreement") or notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Secured Revolving Loans or notes or other material indebtedness, cross default to other material indebtedness, the failure to comply with agreements and covenants and specified events of bankruptcy and insolvency and, with respect to the Secured Revolving Loans, material inaccuracy of representations and warranties, a change of control, the failure of the documents granting security for the obligations under the Secured Credit Agreement to be in full force and effect, and the failure of the liens on any material portion of the collateral securing the obligations under the Secured Credit Agreement to be valid and perfected. As of April 30, 2026, we believe we were in compliance with the covenants of the Debt Instruments.
Under the terms of our Debt Instruments, we have the right to make certain redemptions and prepayments and, depending on market conditions, our strategic priorities and covenant restrictions, may do so from time to time. We also continue to analyze and evaluate our capital structure and explore transactions to strengthen our balance sheet, including those that reduce leverage, interest rates and/or extend maturities, and will seek to do so with the right opportunity. We may also continue to make debt or equity purchases and/or exchanges from time to time through tender offers, exchange offers, redemptions, open market purchases, private transactions, or otherwise, or seek to raise additional debt or equity capital, depending on market conditions and covenant restrictions.
Fiscal 2026
There were no transactions related to our debt securities during the six months ended April 30, 2026.
17
Secured Obligations
The Secured Credit Agreement provides for up to $
As of April 30, 2026, the collateral securing the Secured Credit Agreement included (1) $
Unsecured Obligations
The 8.0% Senior Notes due 2031 (the "2031 Notes") bear interest at
The
Other
We have certain stand-alone cash collateralized letter of credit agreements and facilities under which there was a total of $
18
13. | Per Share Calculation |
Basic and diluted earnings per share for the periods presented below were calculated as follows:
| Three Months Ended |
| Six Months Ended | ||||||||
| April 30, |
| April 30, | ||||||||
(In thousands, except per share data) | 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Numerator: |
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Net (loss) income attributable to Hovnanian Enterprises, Inc. | $ | ( |
| $ |
| $ |
| $ | |||
Less: preferred stock dividends |
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| ( |
Less: undistributed earnings allocated to participating securities |
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Numerator for basic (loss) earnings per share | $ | ( |
| $ |
| $ |
| $ | |||
Plus: undistributed earnings allocated to participating securities |
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Less: undistributed earnings reallocated to participating securities |
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Numerator for diluted (loss) earnings per share | $ | ( |
| $ |
| $ |
| $ | |||
Denominator: |
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Denominator for basic earnings per share – weighted average shares outstanding |
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Effect of dilutive securities: |
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Stock-based payments |
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Denominator for diluted earnings per share – weighted-average shares outstanding |
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Basic (loss) earnings per share | $ | ( |
| $ |
| $ |
| $ | |||
Diluted (loss) earnings per share | $ | ( |
| $ |
| $ |
| $ | |||
For the three months ended April 30, 2026, there were
14. | Preferred Stock |
On July 12, 2005, we issued
19
15. | Common Stock |
Each share of Class A common stock entitles its holder to
On August 4, 2008, the Board adopted a shareholder rights plan (the “Rights Plan”), which was amended on January 11, 2018, January 18, 2021, and January 11, 2024, and which is designed to preserve shareholder value and the value of certain tax assets primarily associated with net operating loss (“NOL”) carryforwards and built-in losses under Section 382 of the Internal Revenue Code. Our ability to use NOLs and built-in losses would be limited if there was an “ownership change” under Section 382. This would occur if shareholders owning (or deemed under Section 382 to own)
On December 18, 2024, the Board authorized an incremental increase to our repurchase program and on April 11, 2025, the Board authorized another increase to our repurchase program, such that, inclusive of any amounts remaining under the existing repurchase authorization, as of April 11, 2025, we were authorized to repurchase up to $
During the six months ended April 30, 2026, we repurchased
20
16. | Income Taxes |
For the three and six months ended April 30, 2026, we recorded income tax expense of $
The Company recognizes deferred income taxes for deferred tax benefits arising from NOL carryforwards and temporary differences between book and tax income which will be recognized in future years as an offset against future taxable income. As part of our analysis, we considered both positive and negative factors that impact profitability and whether those factors would lead to a change in estimate of our deferred tax assets (“DTAs”) that may be realized in the future. At April 30, 2026, the Company has determined that it is more likely than not that sufficient taxable income will be generated in the future to realize its DTAs, net of any state valuation allowances.
17. | Operating and Reporting Segments |
HEI’s operating segments are components of the Company’s business for which discrete financial information is available and reviewed regularly by the chief operating decision maker, our Chief Executive Officer, to evaluate performance, make resource allocations and guide strategic decisions. The Chief Executive Officer uses income (loss) before income taxes as the key operating metric used to measure segment profit or loss. Actual income (loss) before income taxes is reviewed monthly against budgeted amounts from the semi-annual financial plans.
We currently have homebuilding operations in
HEI’s reportable segments consist of the following
Homebuilding:
| (1) | Northeast (Delaware, Maryland, New Jersey, Ohio, Pennsylvania, Virginia and West Virginia) |
| (2) | Southeast (Florida, Georgia and South Carolina) |
| (3) | West (Arizona, California and Texas) |
Operations of the homebuilding segments primarily include the sale and construction of single-family attached and detached homes, attached townhomes and condominiums, urban infill and active lifestyle homes in planned residential developments. In addition, from time to time, operations of the homebuilding segments include sales of land. Operations of the financial services segment include mortgage banking and title services provided to the homebuilding operations’ customers. Our financial services subsidiaries do not typically retain or service mortgages that we originate but sell the mortgages and related servicing rights to investors.
Financial information relating to our reportable segments was as follows:
| Three Months Ended April 30, 2026 | |||||||||||||
(In thousands) |
| Northeast |
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| Southeast |
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| West |
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| Financial Services |
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| Total |
Homebuilding revenues | $ |
| $ |
| $ |
| $ |
| $ | |||||
Financial services revenues |
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All other revenues (1) |
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Total revenues |
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Cost of sales (2) |
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Selling, general and administrative |
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Financial services expenses |
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Other segment items (3) |
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Total segment profit (loss) | $ |
| $ | ( |
| $ | ( |
| $ |
| $ | |||
Corporate and unallocated (4) |
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Income before income taxes |
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| $ | |
21
| Three Months Ended April 30, 2025 | |||||||||||||
(In thousands) |
| Northeast |
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| Southeast |
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| West |
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| Financial Services |
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| Total |
Homebuilding revenues | $ |
| $ |
| $ |
| $ |
| $ | |||||
Financial services revenues |
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All other revenues (1) |
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Total revenues |
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Cost of sales (2) |
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Selling, general and administrative |
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Financial services expenses |
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Other segment items (3) |
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Total segment profit | $ |
| $ |
| $ |
| $ |
| $ | |||||
Corporate and unallocated (4) |
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Income before income taxes |
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| Six Months Ended April 30, 2026 | |||||||||||||
(In thousands) |
| Northeast |
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| Southeast |
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| West |
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| Financial Services |
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| Total |
Homebuilding revenues | $ |
| $ |
| $ |
| $ |
| $ | |||||
Financial services revenues |
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All other revenues (1) |
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Total revenues |
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Cost of sales (2) |
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Selling, general and administrative |
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Financial services expenses |
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| |||||
Other segment items (3) |
| ( |
|
|
|
|
|
|
|
| ||||
Total segment profit (loss) | $ |
| $ | ( |
| $ | ( |
| $ |
| $ | |||
Corporate and unallocated (4) |
|
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|
| |
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
| $ | |
22
| Six Months Ended April 30, 2025 | |||||||||||||
(In thousands) |
| Northeast |
|
| Southeast |
|
| West |
|
| Financial Services |
|
| Total |
Homebuilding revenues | $ |
| $ |
| $ |
| $ |
| $ | |||||
Financial services revenues |
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| |||||
All other revenues (1) |
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| |||||
Total revenues |
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| |||||
Cost of sales (2) |
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| |||||
Selling, general and administrative |
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| |||||
Financial services expenses |
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|
| |||||
Other segment items (3) |
| ( |
|
| ( |
|
|
|
|
|
| |||
Total segment profit | $ |
| $ |
| $ |
| $ |
| $ | |||||
Corporate and unallocated (4) |
|
|
|
|
|
|
|
|
|
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|
|
| |
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
| $ | |
(1) | Consists primarily of land sales revenue, interest income, and income from forfeited customer deposits due to contract cancellations. |
(2) | Consists primarily of homebuilding and land sale costs, amortization of capitalized interest, inventory impairments and land option write-offs. |
(3) | Consists primarily of other interest expensed, and income (loss) from unconsolidated joint ventures. |
(4) | Consists primarily of corporate costs and shared services functions that are not allocated to the homebuilding or financial services reportable segments. In addition, includes the results of operations attributable to the KSA operating segment, which does not meet the quantitative thresholds for separate presentation as a reportable segment. |
(In thousands) | April 30, 2026 |
| October 31, 2025 | |||||
Assets: |
|
|
|
|
| |||
Northeast | $ |
| $ | |||||
Southeast |
|
|
| |||||
West |
|
|
| |||||
Total homebuilding |
|
|
| |||||
Financial services |
|
|
| |||||
Total assets | $ |
| $ | |||||
23
18. | Investments in Unconsolidated Homebuilding and Land Development Joint Ventures |
We enter into homebuilding and land development joint ventures from time to time as a means of accessing lot positions, expanding our market opportunities, establishing strategic alliances, managing our risk profile, leveraging our capital base and enhancing returns on capital.
During the first quarter of fiscal 2025, we contributed
During the first quarter of fiscal 2026, we assumed control of
During the first quarter of fiscal 2026, we contributed
The tables set forth below summarize the combined financial information related to our unconsolidated homebuilding joint ventures that are accounted for under the equity method. During the periods presented, we did not have an investment in any land development joint ventures.
(In thousands) | April 30, 2026 |
| October 31, 2025 | ||
Assets: |
|
|
|
|
|
Cash and cash equivalents | $ |
| $ | ||
Inventories |
|
|
| ||
Other assets |
|
|
| ||
Total assets | $ |
| $ | ||
Liabilities and equity: |
|
|
|
|
|
Accounts payable and accrued liabilities | $ |
| $ | ||
Notes payable |
|
|
| ||
Total liabilities |
|
|
| ||
Equity of: |
|
|
|
|
|
Hovnanian Enterprises, Inc. |
|
|
| ||
Others |
|
|
| ||
Total equity |
|
|
| ||
Total liabilities and equity | $ |
| $ | ||
Debt to capitalization ratio |
|
|
| ||
24
As of April 30, 2026 and October 31, 2025, we had outstanding advances to unconsolidated joint ventures of $
| Three Months Ended April 30, | ||||
(In thousands) |
| 2026 |
|
| 2025 |
Revenues | $ |
| $ | ||
Cost of sales and expenses |
| ( |
|
| ( |
Joint venture net income | $ |
| $ | ||
Our share of net (loss) income | $ | ( |
| $ | |
| Six Months Ended April 30, | ||||
(In thousands) |
| 2026 |
|
| 2025 |
Revenues | $ |
| $ | ||
Cost of sales and expenses |
| ( |
|
| ( |
Joint venture net income | $ |
| $ | ||
Our share of net income | $ |
| $ | ||
The reason “Our share of net (loss) income” in homebuilding joint ventures is higher or lower than the “Joint venture net income” in the tables above is a result of our varying ownership percentages in each investment. As of April 30, 2026 and 2025, respectively, we had investments in
To compensate us for the administrative services we provide as the manager of certain unconsolidated joint ventures, we receive a management fee based on a percentage of the applicable unconsolidated joint ventures' revenues. These management fees, which totaled $
25
Acquisition of KSA
On January 1, 2026, we acquired an additional
As of January 1, 2026, the date of acquisition, we accounted for KSA on a consolidated basis and derecognized it as an equity method investment. We remeasured our previously held equity method investment as of the acquisition date to a fair value of $
In accordance with ASC 805, the following fair values were assigned to assets acquired and liabilities assumed based on management’s estimates and assumptions. The purchase price allocation presented in our Condensed Consolidated Balance Sheets was as follows:
(In thousands) | January 1, 2026 | |
Cash, cash equivalents and restricted cash | $ | |
Property and equipment, net |
| |
Sold and unsold homes and lots under development |
| |
Land and land options held for future development or sale |
| |
Receivables, deposits and notes, net |
| |
Prepaid expenses and other assets |
| |
Accounts payable and accrued liabilities |
| ( |
Customers' deposits |
| ( |
Net liabilities assumed |
| ( |
Goodwill |
| |
Noncontrolling interests |
| ( |
Gain on consolidation |
| ( |
Purchase price consideration | $ | |
The excess of purchase consideration over the fair value of the net liabilities acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of KSA, and is not deductible for income tax purposes. The results of KSA were included in the Condensed Consolidated Statement of Operations from the date of acquisition and included $
26
19. | Recent Accounting Pronouncements |
In December 2023, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires enhanced disclosures related to the rate reconciliation and information on income taxes paid. This guidance will be applied prospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2024. We are currently evaluating the potential impact the adoption of this guidance will have on our Condensed Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires disclosure of additional information about specific cost and expense categories in the notes to the financial statements. This guidance will be applied either prospectively or retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2026, and interim reporting periods in fiscal years beginning after December 15, 2027. We are currently evaluating the potential impact the adoption of this guidance will have on our Condensed Consolidated Financial Statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”). ASU 2025-06 modernizes the accounting for the costs of internal-use software by removing all references to software development project stages so that the guidance is neutral to different software development methods. This guidance is effective for fiscal years beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Early adoption is permitted and the amendments in this update may be applied on a retrospective, modified transition, or prospective basis. We are currently evaluating the potential impact that the adoption of this guidance will have on our Condensed Consolidated Financial Statements.
20. | Fair Value of Financial Instruments |
We use a fair-value hierarchy which prioritizes the inputs used in measuring fair value as follows:
| Level 1: | Fair value determined based on quoted prices in active markets for identical assets. |
| Level 2: | Fair value determined using significant other observable inputs. |
| Level 3: | Fair value determined using significant unobservable inputs. |
Our financial instruments measured at fair value on a recurring basis are summarized below:
|
|
|
|
| Fair Value at |
|
| Fair Value at |
|
| Fair Value |
|
| April 30, |
|
| October 31, |
(In thousands) |
| Hierarchy |
|
| 2026 |
|
| 2025 |
|
|
|
|
|
|
|
|
|
Mortgage loans held for sale (1) |
| Level 2 |
| $ |
| $ |
(1)
Fair value of mortgage loans held for sale is based on independent quoted market prices, where available, or the prices for other mortgage loans with similar characteristics.
The financial services segment had a pipeline of loan applications in process of $
In addition, the financial services segment uses investor commitments and forward sales of mandatory MBS to hedge its mortgage-related interest rate exposure. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk is managed by entering into MBS forward commitments, option contracts with investment banks, federally regulated bank affiliates and loan sales transactions with permanent investors meeting the segment’s credit standards. Our risk, in the event of default by the purchaser, is the difference between the contract price and fair value of the MBS forward commitments and option contracts. At April 30, 2026, we had no open mandatory investor commitments to sell MBS.
27
Changes in fair value that are included in income are shown by financial instrument and financial statement line item, below:
| Three Months Ended April 30, 2026 | |||||||
| Mortgage Loans Held For Sale |
| Interest Rate Lock Commitments |
| Forward Contracts | |||
|
|
|
|
|
|
|
|
|
Change in fair value included in financial services revenue | $ | ( |
| $ |
| $ | ||
| Three Months Ended April 30, 2025 | |||||||
|
| Mortgage Loans Held For Sale |
|
| Interest Rate Lock Commitments |
|
| Forward Contracts |
|
|
|
|
|
|
|
|
|
Change in fair value included in financial services revenue | $ | ( |
| $ |
| $ | ||
|
| Six Months Ended April 30, 2026 | ||||||
|
| Mortgage Loans Held For Sale |
|
| Interest Rate Lock Commitments |
|
| Forward Contracts |
|
|
|
|
|
|
|
|
|
Change in fair value included in financial services revenue | $ | ( |
| $ |
| $ | ||
|
| Six Months Ended April 30, 2025 | ||||||
|
| Mortgage Loans Held For Sale |
|
| Interest Rate Lock Commitments |
|
| Forward Contracts |
|
|
|
|
|
|
|
|
|
Change in fair value included in financial services revenue | $ | ( |
| $ |
| $ | ||
Assets measured at fair value on a nonrecurring basis are those assets for which we have recorded valuation adjustments and write-offs during the three and six months ended April 30, 2026 and 2025. The assets measured at fair value on a nonrecurring basis are all within our homebuilding operations and are summarized below:
|
| Three Months Ended April 30, 2026 | |||||||||
(In thousands) |
| Fair Value Hierarchy |
|
| Pre-Impairment Amount |
|
| Total Losses |
|
| Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
Land and land options held for future development or sale |
| Level 3 |
| $ |
| $ | ( |
| $ | ||
|
| Three Months Ended April 30, 2025 | |||||||||
(In thousands) |
| Fair Value Hierarchy |
|
| Pre-Impairment Amount |
|
| Total Losses |
|
| Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
Land and land options held for future development or sale |
| Level 3 |
| $ |
| $ | ( |
| $ | ||
|
| Six Months Ended April 30, 2026 | |||||||||
(In thousands) |
| Fair Value Hierarchy |
|
| Pre-Impairment Amount |
|
| Total Losses |
|
| Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
Land and land options held for future development or sale |
| Level 3 |
| $ |
| $ | ( |
| $ | ||
|
| Six Months Ended April 30, 2025 | |||||||||
(In thousands) |
| Fair Value Hierarchy |
|
| Pre-Impairment Amount |
|
| Total Losses |
|
| Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
Land and land options held for future development or sale |
| Level 3 |
| $ |
| $ | ( |
| $ | ||
28
We estimate the fair value of each impaired community by determining the present value of the estimated future cash flows at a discount rate commensurate with the risk of the respective community. For the three and six months ended April 30, 2026, our discount rates used to determine the fair value ranged from
The fair value of our cash equivalents, restricted cash and cash equivalents and customers' deposits approximates their carrying amount, based on Level 1 inputs.
The fair value of each series of our notes and credit facilities are listed below. Level 2 measurements are estimated based on recent trades or quoted market prices for the same issues or based on recent trades or quoted market prices for our debt of similar security and maturity to achieve comparable yields. Level 3 measurements are estimated based on third-party broker quotes or management’s estimate of the fair value based on available trades for similar debt instruments. As shown in the table below, our
Fair Value as of April 30, 2026 | |||||||||||
(In thousands) |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
Senior Notes: |
|
|
|
|
|
|
|
|
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|
|
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|
|
|
| |||||
|
|
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|
|
|
| |||||
|
|
|
|
|
|
| |||||
Total fair value | $ |
| $ |
| $ |
| $ | ||||
Fair Value as of October 31, 2025 | |||||||||||
(In thousands) |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
Senior Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
| |||||
|
|
|
|
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| |||||
|
|
|
|
|
|
| |||||
Total fair value | $ |
| $ |
| $ |
| $ | ||||
The Senior Secured Revolving Credit Facility is not included in the above tables because there were
21. | Transactions with Related Parties |
From time to time, an engineering firm owned by Tavit Najarian, a relative of Ara K. Hovnanian, our Chairman and Chief Executive Officer, and Alexander Hovnanian, our President, provides services to the Company. During the three months ended April 30, 2026 and 2025, the services provided by such engineering firm to the Company totaled $
29
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Hovnanian Enterprises, Inc. (“HEI”) conducts all of its homebuilding and financial services operations through its subsidiaries (references herein to the “Company,” “we,” “us” or “our” refer to HEI and its consolidated subsidiaries and should be understood to reflect the consolidated business of HEI’s subsidiaries).
Key Performance Indicators
The following key performance indicators are commonly used in the homebuilding industry and by management as a means to better understand our operating performance and trends affecting our business and compare our performance with the performance of other homebuilders. We believe these key performance indicators also provide useful information to investors in analyzing our performance:
| ● | Net contracts is a volume indicator which represents the number of new contracts executed during the period for the purchase of homes, less cancellations of contracts in the same period. The dollar value of net contracts represents the dollars associated with net contracts executed in the period. These values are an indicator of potential future revenues; |
|
|
|
| ● | Contract backlog is a volume indicator which represents the number of homes that are under contract but not yet delivered as of the stated date. The dollar value of contract backlog represents the dollar amount of the homes in contract backlog. These values are an indicator of potential future revenues; |
|
|
|
| ● | Active selling communities is a volume indicator which represents the number of communities which are open for sale with ten or more home sites available as of the end of a period. We identify communities based on product type; therefore, at times there are multiple communities at one land site. These values are an indicator of potential revenues; |
|
|
|
| ● | Net contracts per active selling community is used to indicate the pace at which homes are being sold (put into contract) in active selling communities and is calculated by dividing the number of net contracts in a period by the number of active selling communities in the same period. Sales pace is an indicator of market strength and demand; and |
|
|
|
| ● | Contract cancellation rates is a volume indicator which represents the number of sales contracts cancelled in the period divided by the number of gross sales contracts executed during the period. Contract cancellation rates as a percentage of backlog is calculated by dividing the number of cancelled contracts in the period by the contract backlog at the beginning of the period. Cancellation rates as compared to prior periods can be an indicator of market strength or weakness. |
On January 1, 2026, we acquired a controlling interest in a previously unconsolidated joint venture in the Kingdom of Saudi Arabia ("KSA"), that operates and markets itself under the trade name HOV Global. Beginning in the first quarter of fiscal 2026, the results from KSA are included in our consolidated financial statements. Consistent with our historical presentation, we will continue to exclude the results of our KSA operations from these key performance indicators generally (unless otherwise indicated) because such operations are not expected to have a material impact on our financial results for fiscal 2026. Where we have excluded the KSA operations, we refer to such metrics as being for our “domestic” operations.
Overview
Market Conditions and Operating Results
The demand for new and existing homes is dependent on a variety of demographic and economic factors, including job and wage growth, household formation, consumer confidence, mortgage financing, interest rates, inflation and overall housing affordability.
During fiscal 2025 and continuing through the first half of fiscal 2026, mortgage rates have fluctuated but still remain at a persistently high level. As a result, affordability generally remains challenging for homebuyers. We have stayed aggressive in our pricing, incentives and concessions in order to align with the current market.
30
We continue to use our increased inventory of quick move-in homes ("QMI homes") to help meet buyers’ needs for more affordable housing in the existing uncertain interest rate environment. The time between contract signing and closing is shorter with a QMI home as compared to a to be built home, which provides customers with more certainty on their mortgage pricing. The availability of QMI homes also allows us to offer mortgage interest rate buydown assistance, which is a tool we offer through our wholly-owned mortgage banking subsidiary ("K. Hovnanian Mortgage"), to help ease the impact of higher monthly payments from rising interest rates. We pay the cost of interest rate buydowns for customers that qualify through K. Hovnanian Mortgage and decide to use the program. The level of interest rate based incentives utilized differs across our markets and is one of several available options we use to drive sales and close homes.
Our emphasis on driving sales pace versus price resulted in domestic net contracts increasing by 1.0% in the second quarter of fiscal 2026 compared to the prior year second quarter and 2.0% for the six months ended April 30, 2026 compared to the same period of the prior year. Within the six-month period, net contracts fluctuated from month to month, reflecting ongoing shifts in market conditions and consumer sentiment, including increased hesitancy from buyers, which we believe was partially attributed to the Iran war. Even with the volatility in the broader economy and affordability constraints, we were able to raise prices or decrease incentives in approximately 44% of our domestic communities during the second quarter of fiscal 2026.
While the long-term fundamentals of the new home market remain favorable, there remains a great degree of uncertainty due to inflation, tariffs, the continued possibility of an economic recession, employment risk, geopolitical events and the potential for further mortgage rate increases. While we continue to experience some supply chain issues, we remain focused on continuing to shorten our construction cycle times and building on our national initiatives to drive down costs with our material providers and trade partners. The changing conditions in the housing market, and in the general economy, makes it difficult to predict how strongly our business will be impacted by these external factors over fiscal 2026 and beyond.
During the six months ended April 30, 2026, our cash position allowed us to spend $413.0 million on domestic land purchases and land development for long-term growth and repurchase $18.5 million of our common stock and still have total liquidity of $442.0 million, including $310.9 million of homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility as of April 30, 2026.
Information on our operating results for the three and six months ended April 30, 2026 are as follows:
● Sale of homes revenues decreased to $604.2 million for the three months ended April 30, 2026 from $650.3 million for the three months ended April 30, 2025, and was $1.2 billion for the six months ended April 30, 2026 and $1.3 billion for the six months ended April 30, 2025. There was an 11.8% and 12.1% decrease in the number of home deliveries for the three and six months ended April 30, 2026, respectively, compared to the same periods of the prior year, partially offset by an increase in average price of 5.3% and 3.4% for the three and six months ended April 30, 2026, respectively, compared to the same periods of the prior year.
● Gross margin dollars decreased 31.0% and 36.0% for the three and six months ended April 30, 2026, respectively, as compared to the same periods of the prior year. Gross margin percentage decreased to 10.2% for both the three and six months ended April 30, 2026 from 13.8% and 14.5% for the three and six months ended April 30, 2025, respectively. Gross margin percentage, before cost of sales interest expense and land charges, decreased to 14.3% for the three months ended April 30, 2026 from 17.3% for the three months ended April 30, 2025 and decreased to 13.9% for the six months ended April 30, 2026 from 17.8% for the six months ended April 30, 2025. The decrease in gross margin percentage was primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable. In the current homebuilding environment, we remain focused on driving financial performance by increasing our sales pace versus achieving a higher gross margin.
● Selling, general and administrative costs (including corporate general and administrative expenses) ("Total SGA") was $84.0 million, or 12.6% of total revenues, in the three months ended April 30, 2026 compared with $80.6 million, or 11.7% of total revenues, in the three months ended April 30, 2025, and $168.0 million, or 12.9% of total revenues, in the six months ended April 30, 2026 compared with $167.5 million, or 12.3% of total revenues, in the six months ended April 30, 2025. The increase in Total SGA percentage is primarily due to the decrease in sale of homes revenue for the same periods of the prior year.
● Income before income taxes decreased to $0.3 million for the three months ended April 30, 2026 from $26.5 million for the three months ended April 30, 2025 and decreased to $29.0 million for the six months ended April 30, 2026 from $66.4 million for the six months ended April 30, 2025. Net income decreased to a loss of $0.6 million for the three months ended April 30, 2026 from $19.7 million for the three months ended April 30, 2025 and decreased to $20.3 million for the six months ended April 30, 2026 from $47.9 million for the six months ended April 30, 2025. Included in income before income taxes for the three months ended April 30, 2026 and 2025 were land sales of $33.5 million and $12.6 million, respectively. Included in income before income taxes for the six months ended April 30, 2026 and 2025 was a $26.8 million gain on consolidation of joint ventures and a $22.7 million gain on the contribution of assets to a new joint venture, respectively, along with land sales of $68.2 million and $19.4 million, respectively. Earnings per share, both basic and diluted, decreased to a loss of $(0.46) for the three months ended April 30, 2026 compared to $2.64 and $2.43, respectively, for the three months ended April 30, 2025. Earnings per share, basic and diluted, decreased to $2.36 and $2.20, respectively, for the six months ended April 30, 2026 compared to $6.53 and $6.02, respectively, for the six months ended April 30, 2025.
31
● Net domestic contracts increased 1.0% and 2.0% for the three and six months ended April 30, 2026, respectively, compared to the same periods of the prior year. The increase for the three and six months ended is primarily due to our current strategy of using increased incentives to drive sales pace, although the incentives needed decreased this quarter from the first quarter of fiscal 2026.
● Net domestic contracts per active selling community increased slightly to 11.3 and 21.2 for the three and six months ended April 30, 2026, respectively, compared to 11.2 and 20.8 in the same periods of the prior year.
● Domestic contract backlog decreased from 1,711 homes at April 30, 2025 to 1,613 homes at April 30, 2026, and the dollar value of domestic contract backlog decreased to $938.4 million, a 5.0% decrease in dollar value compared to the prior year, as our domestic backlog conversion ratio has increased from the prior year period due to increased sales of QMI homes that were both sold and delivered within the quarter.
Results of Operations
Total Revenues
Compared to the same period in the prior year, revenues (decreased) increased as follows:
|
| Three Months Ended | ||||||
|
|
|
| Variance |
|
|
| |
|
|
|
| 2026 |
|
|
| |
| April 30, |
| Compared |
| April 30, | |||
(Dollars in thousands) | 2026 |
| to 2025 |
| 2025 | |||
Homebuilding: |
|
|
|
|
|
|
|
|
Sale of homes | $ | 604,188 |
| $ | (46,126) |
| $ | 650,314 |
Land sales |
| 33,502 |
|
| 20,898 |
|
| 12,604 |
Other revenues |
| 6,557 |
|
| 4,322 |
|
| 2,235 |
Financial services |
| 23,398 |
|
| 2,080 |
|
| 21,318 |
Total change | $ | 667,645 |
| $ | (18,826) |
| $ | 686,471 |
Total revenues percent change |
|
|
|
| (2.7) | % |
|
|
|
| Six Months Ended | ||||||
|
|
|
| Variance |
|
|
| |
|
|
|
| 2026 |
|
|
| |
| April 30, |
| Compared |
| April 30, | |||
(Dollars in thousands) | 2026 |
| to 2025 |
| 2025 | |||
Homebuilding: |
|
|
|
|
|
|
|
|
Sale of homes | $ | 1,179,947 |
| $ | (117,281) |
| $ | 1,297,228 |
Land sales |
| 68,214 |
|
| 48,784 |
|
| 19,430 |
Other revenue |
| 9,030 |
|
| 3,854 |
|
| 5,176 |
Financial services |
| 42,406 |
|
| 4,146 |
|
| 38,260 |
Total change | $ | 1,299,597 |
| $ | (60,497) |
| $ | 1,360,094 |
Total revenues percent change |
|
|
|
| (4.4) | % |
|
|
Homebuilding: Sale of Homes
For the three months ended April 30, 2026, sale of homes revenues decreased 7.1% compared to the same period in the prior year. The sale of homes revenue decreased due to an 11.8% decrease in homes delivered, partially offset by a 5.3% increase in the average price per home for the three months ended April 30, 2026 compared with the prior year period. The average price per home increased to $532,794 in the three months ended April 30, 2026 from $506,081 in the three months ended April 30, 2025. For the six months ended April 30, 2026, sale of homes revenues decreased 9.0% compared to the same period in the prior year. The sale of homes revenues decreased due to a 12.1% decrease in homes delivered, partially offset by a 3.4% increase in the average price per home for the six months ended April 30, 2026 compared to the same period in the prior year. The average price per home increased to $528,413 in the six months ended April 30, 2026 from $510,921 in the six months ended April 30, 2025. The increase in average price was the result of the geographic and community mix of our deliveries. For further detail on changes in segment revenues see “Homebuilding: Operations by Segment” below. For further detail on land sales and other revenues, see “Homebuilding: Land Sales and Other Revenues” below.
32
Information on the sale of homes is set forth in the table below:
| Three Months Ended April 30, |
| Six Months Ended April 30, | ||||||||
(Dollars in thousands, except average sales price) | 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Consolidated total: |
|
|
|
|
|
|
|
|
|
|
|
Housing revenues | $ | 604,188 |
| $ | 650,314 |
| $ | 1,179,947 |
| $ | 1,297,228 |
Homes delivered |
| 1,134 |
|
| 1,285 |
|
| 2,233 |
|
| 2,539 |
Average sales price | $ | 532,794 |
| $ | 506,081 |
| $ | 528,413 |
| $ | 510,921 |
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated joint ventures: (1) |
|
|
|
|
|
|
|
|
|
|
|
Housing revenues | $ | 125,914 |
| $ | 144,495 |
| $ | 198,305 |
| $ | 276,271 |
Homes delivered |
| 181 |
|
| 207 |
|
| 299 |
|
| 404 |
Average sales price | $ | 695,657 |
| $ | 698,043 |
| $ | 663,227 |
| $ | 683,839 |
(1) Represents housing revenues and home deliveries for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated joint ventures. See Note 18 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our unconsolidated joint ventures.
Homebuilding: Land Sales and Other Revenues
Land sales and other revenues increased $25.2 million and $52.6 million for the three and six months ended April 30, 2026, respectively, compared to the same periods in the prior year. Revenue associated with land sales can vary significantly due to the mix of land parcels sold. There were three and four land sales during the three and six months ended April 30, 2026, respectively, and two and three land sales in the three and six months ended April 30, 2025, respectively. Land sales revenues increased $20.9 million and $48.8 million during the three and six months ended April 30, 2026, respectively, compared to the same periods in the prior year.
Homebuilding: Cost of Sales
Cost of sales includes expenses for consolidated housing and land and lot sales, including inventory impairments and land option write-offs (defined as “land charges” in the tables below). A breakout of such expenses for homebuilding and land and lot sales and the gross margins for each is set forth below.
Homebuilding gross margin, before cost of sales interest expense and land charges, is a non-GAAP financial measure. This measure should not be considered as an alternative to homebuilding gross margin determined in accordance with U.S. GAAP as an indicator of operating performance.
Management believes this non-GAAP measure enables investors to better understand our operating performance. This measure is also useful internally, helping management evaluate our operating results on a consolidated basis and relative to other companies in our industry. In particular, the magnitude and volatility of land charges for the Company, and for other homebuilders, have been significant and, as such, have made comparable financial analysis of our industry more difficult. Homebuilding metrics excluding land charges, as well as interest amortized to cost of sales, and other similar presentations prepared by analysts and other companies are frequently used to assist investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies’ respective levels of impairments and debt.
| Three Months Ended |
| Six Months Ended |
| ||||||||
| April 30, |
| April 30, |
| ||||||||
(Dollars in thousands) | 2026 |
| 2025 |
| 2026 |
| 2025 |
| ||||
Sale of homes | $ | 604,188 |
| $ | 650,314 |
| $ | 1,179,947 |
| $ | 1,297,228 |
|
Cost of sales, excluding interest expense and land charges |
| 517,665 |
|
| 537,600 |
|
| 1,016,078 |
|
| 1,066,345 |
|
Homebuilding gross margin, before cost of sales interest expense and land charges |
| 86,523 |
|
| 112,714 |
|
| 163,869 |
|
| 230,883 |
|
Cost of sales interest expense, excluding land sales interest expense |
| 15,872 |
|
| 19,938 |
|
| 32,439 |
|
| 38,676 |
|
Homebuilding gross margin, after cost of sales interest expense, before land charges |
| 70,651 |
|
| 92,776 |
|
| 131,430 |
|
| 192,207 |
|
Land charges |
| 8,750 |
|
| 3,056 |
|
| 11,109 |
|
| 4,096 |
|
Homebuilding gross margin | $ | 61,901 |
| $ | 89,720 |
| $ | 120,321 |
| $ | 188,111 |
|
Homebuilding gross margin percentage |
| 10.2 | % |
| 13.8 | % |
| 10.2 | % |
| 14.5 | % |
Homebuilding gross margin percentage, before cost of sales interest expense and land charges |
| 14.3 | % |
| 17.3 | % |
| 13.9 | % |
| 17.8 | % |
Homebuilding gross margin percentage, after cost of sales interest expense, before land charges |
| 11.7 | % |
| 14.3 | % |
| 11.1 | % |
| 14.8 | % |
33
Cost of sales as a percentage of consolidated home sales revenues are presented below:
|
| Three Months Ended |
| Six Months Ended | ||||||||
|
| April 30, |
| April 30, | ||||||||
|
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Sale of homes |
| 100.0 | % |
| 100.0 | % |
| 100.0 | % |
| 100.0 | % |
Cost of sales, excluding interest expense and land charges: |
|
|
|
|
|
|
|
|
|
|
|
|
Housing, land and development costs |
| 73.9 | % |
| 71.5 | % |
| 73.9 | % |
| 71.2 | % |
Commissions |
| 3.3 | % |
| 3.2 | % |
| 3.2 | % |
| 3.1 | % |
Financing concessions |
| 4.3 | % |
| 3.7 | % |
| 4.2 | % |
| 3.5 | % |
Overheads |
| 4.2 | % |
| 4.3 | % |
| 4.8 | % |
| 4.4 | % |
Total cost of sales, excluding interest expense and land charges |
| 85.7 | % |
| 82.7 | % |
| 86.1 | % |
| 82.2 | % |
Cost of sales interest |
| 2.6 | % |
| 3.0 | % |
| 2.8 | % |
| 3.0 | % |
Land charges |
| 1.5 | % |
| 0.5 | % |
| 0.9 | % |
| 0.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding gross margin percentage |
| 10.2 | % |
| 13.8 | % |
| 10.2 | % |
| 14.5 | % |
Homebuilding gross margin percentage, before cost of sales interest expense and land charges |
| 14.3 | % |
| 17.3 | % |
| 13.9 | % |
| 17.8 | % |
Homebuilding gross margin percentage, after cost of sales interest expense, before land charges |
| 11.7 | % |
| 14.3 | % |
| 11.1 | % |
| 14.8 | % |
We sell a variety of home types in various communities, each yielding a different gross margin. As a result, depending on the mix of communities delivering homes, consolidated gross margin may fluctuate up or down. Total homebuilding gross margin percentage decreased to 10.2% for both the three and six months ended April 30, 2026, compared to 13.8% and 14.5% for the prior year periods. Total homebuilding gross margin percentage, before cost of sales interest expense and land charges decreased to 14.3% and 13.9% for the three and six months ended April 30, 2026, respectively, compared to 17.3% and 17.8% for the three and six months ended April 30, 2025, respectively. The decrease in gross margin percentage for the three and six months ended April 30, 2026 was primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable.
Land and lot sale expenses and gross margins are set forth below:
| Three Months Ended |
| Six Months Ended | ||||||||
| April 30, |
| April 30, | ||||||||
(In thousands) | 2026 |
| 2025 |
| 2026 |
| 2025 | ||||
Land and lot sales | $ | 33,502 |
| $ | 12,604 |
| $ | 68,214 |
| $ | 19,430 |
Cost of sales, excluding interest |
| 13,396 |
|
| 5,689 |
|
| 24,614 |
|
| 10,234 |
Land and lot sales gross margin, excluding interest |
| 20,106 |
|
| 6,915 |
|
| 43,600 |
|
| 9,196 |
Land and lot sales interest expense |
| 94 |
|
| - |
|
| 118 |
|
| 618 |
Land and lot sales gross margin, including interest | $ | 20,012 |
| $ | 6,915 |
| $ | 43,482 |
| $ | 8,578 |
Land sales are ancillary to our homebuilding operations and are expected to continue in the future but may fluctuate significantly.
34
Homebuilding: Inventory Impairments and Land Option Write-Offs
Inventory impairments and land option write-offs reflects certain inventories we have either written off or written down to their estimated fair value totaling $8.8 million and $3.1 million in expense for the three months ended April 30, 2026 and 2025, respectively, and $11.1 million and $4.1 million during the six months ended April 30, 2026 and 2025, respectively. Inventory impairments amounted to $5.3 million during both the three and six months ended April 30, 2026 and $1.2 million during both the three and six months ended April 30, 2025. The impairments recorded for fiscal 2026 were for two communities in the Southeast segment and two communities in the West segment. The impairment recorded for fiscal 2025 was for one community in the Northeast segment. We wrote-off residential land option, approval and engineering costs across each of our segments during the first half of both fiscal 2026 and 2025.
Homebuilding: Selling, General and Administrative
Homebuilding selling, general and administrative (“SGA”) expenses increased $5.9 million to $57.0 million for the three months ended April 30, 2026 and increased $2.0 million to $107.3 million for the six months ended April 30, 2026 compared to the same periods in the prior year. The increase for the three and six months ended April 30, 2026 compared to the same periods in the prior year was primarily due to the cost of annual merit increases and a decrease in unconsolidated joint venture deliveries, where we receive a management fee on each delivery, which offsets our SGA expenses incurred with respect to the applicable joint venture.
Homebuilding: Key Performance Indicators
Net Domestic Contracts Per Active Selling Community
Net domestic contracts per active selling community for the three and six months ended April 30, 2026 were 11.3 and 21.2, respectively, compared to 11.2 and 20.8 for the same periods in the prior year, respectively. Our reported level of domestic sales contracts (net of cancellations) continues to be driven by customer demand for our available QMI homes. This approach of offering a strong selection of QMI homes allows customers to take advantage of available incentives and purchase homes quickly and affordably.
Domestic Contract Cancellation Rates
The following table provides historical quarterly cancellation rates, which represents the number of cancelled domestic contracts in the quarter divided by the number of gross domestic sales contracts executed in the quarter, excluding unconsolidated joint ventures:
Quarter |
| 2026 |
| 2025 |
| 2024 |
| 2023 |
| 2022 | |||||
First |
| 14 | % |
| 16 | % |
| 14 | % |
| 30 | % |
| 14 | % |
Second |
| 17 | % |
| 15 | % |
| 14 | % |
| 18 | % |
| 17 | % |
Third |
|
|
|
| 19 | % |
| 17 | % |
| 16 | % |
| 27 | % |
Fourth |
|
|
|
| 17 | % |
| 18 | % |
| 25 | % |
| 41 | % |
The following table provides quarterly domestic contract cancellations as a percentage of the beginning domestic backlog, excluding unconsolidated joint ventures:
Quarter |
| 2026 |
| 2025 |
| 2024 |
| 2023 |
| 2022 | |||||
First |
| 16 | % |
| 14 | % |
| 10 | % |
| 16 | % |
| 8 | % |
Second |
| 21 | % |
| 15 | % |
| 13 | % |
| 16 | % |
| 9 | % |
Third |
|
|
|
| 17 | % |
| 12 | % |
| 12 | % |
| 8 | % |
Fourth |
|
|
|
| 17 | % |
| 15 | % |
| 13 | % |
| 13 | % |
Most cancellations occur within the legal rescission period, which varies by state but is generally less than two weeks after the signing of the contract. Cancellations also occur as a result of a buyer’s failure to qualify for a mortgage, which generally occurs during the first few weeks after signing. Generally, when sales pace is increasing, the cancellation rate as a percentage of beginning backlog tends to lag the changes seen in our cancellation rate as a percentage of gross sales. Market conditions still remain uncertain and it is difficult to predict what cancellation rates will be in the future.
35
Contract Backlog
Our consolidated sales contracts and homes in contract backlog, excluding unconsolidated joint ventures, is set forth below:
| Net Contracts for the |
| Net Contracts for the |
|
|
|
|
|
| ||||||||
| Three Months Ended |
| Six Months Ended |
| Contract Backlog as of | ||||||||||||
| April 30, |
| April 30, |
| April 30, | ||||||||||||
(Dollars in thousands) | 2026 |
| 2025 |
| 2026 |
| 2025 |
| 2026 |
| 2025 | ||||||
Northeast: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars | $ | 299,449 |
| $ | 261,796 |
| $ | 525,909 |
| $ | 513,432 |
| $ | 451,132 |
| $ | 506,850 |
Number of homes |
| 539 |
|
| 497 |
|
| 951 |
|
| 937 |
|
| 775 |
|
| 824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars | $ | 81,333 |
| $ | 83,871 |
| $ | 172,673 |
| $ | 159,970 |
| $ | 120,014 |
| $ | 155,904 |
Number of homes |
| 166 |
|
| 168 |
|
| 348 |
|
| 304 |
|
| 212 |
|
| 266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars | $ | 379,146 |
| $ | 360,952 |
| $ | 726,181 |
| $ | 676,484 |
| $ | 367,249 |
| $ | 325,472 |
Number of homes |
| 707 |
|
| 733 |
|
| 1,355 |
|
| 1,362 |
|
| 626 |
|
| 621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic subtotal: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars | $ | 759,928 |
| $ | 706,619 |
| $ | 1,424,763 |
| $ | 1,349,886 |
| $ | 938,395 |
| $ | 988,226 |
Number of homes |
| 1,412 |
|
| 1,398 |
|
| 2,654 |
|
| 2,603 |
|
| 1,613 |
|
| 1,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KSA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars | $ | 4,497 |
| $ | - |
| $ | 4,497 |
| $ | - |
| $ | 185,964 |
| $ | - |
Number of homes |
| 19 |
|
| - |
|
| 19 |
|
| - |
|
| 765 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars | $ | 764,425 |
| $ | 706,619 |
| $ | 1,429,260 |
| $ | 1,349,886 |
| $ | 1,124,359 |
| $ | 988,226 |
Number of homes |
| 1,431 |
|
| 1,398 |
|
| 2,673 |
|
| 2,603 |
|
| 2,378 |
|
| 1,711 |
(1) Excludes eight consolidated homes and $5.0 million of contract backlog related to the assets and liabilities contributed from the West segment to a joint venture we entered into during the three months ended January 31, 2025.
Domestic contract backlog dollars decreased 5.0% as of April 30, 2026 compared to April 30, 2025, and the number of homes in domestic backlog decreased 5.7% for the same period. The decrease in domestic contract backlog dollars and number of homes as of April 30, 2026 compared to April 30, 2025, was primarily driven by an increase in sales of QMI homes and improved domestic contract backlog conversion.
Homebuilding: Results by Reportable Segment
Financial information relating to our homebuilding operations by reportable segment was as follows:
| Three Months Ended April 30, | |||||||||||
(Dollars in thousands, except average sales price) | 2026 |
| 2025 |
| Variance |
|
| Variance % | ||||
Northeast |
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding revenue | $ | 252,083 |
| $ | 257,281 |
| $ | (5,198) |
|
| (2.0) | % |
Income before income taxes | $ | 41,010 |
| $ | 37,519 |
| $ | 3,491 |
|
| 9.3 | % |
Homes delivered |
| 386 |
|
| 450 |
|
| (64) |
|
| (14.2) | % |
Average sales price | $ | 561,435 |
| $ | 569,811 |
| $ | (8,376) |
|
| (1.5) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast |
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding revenue | $ | 73,226 |
| $ | 74,676 |
| $ | (1,450) |
|
| (1.9) | % |
(Loss) income before income taxes | $ | (5,054) |
| $ | 1,160 |
| $ | (6,214) |
|
| (535.7) | % |
Homes delivered |
| 149 |
|
| 153 |
|
| (4) |
|
| (2.6) | % |
Average sales price | $ | 491,228 |
| $ | 487,601 |
| $ | 3,627 |
|
| 0.7 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
West |
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding revenue | $ | 316,692 |
| $ | 332,385 |
| $ | (15,693) |
|
| (4.7) | % |
(Loss) income before income taxes | $ | (11,323) |
| $ | 13,310 |
| $ | (24,633) |
|
| (185.1) | % |
Homes delivered |
| 599 |
|
| 682 |
|
| (83) |
|
| (12.2) | % |
Average sales price | $ | 524,676 |
| $ | 468,176 |
| $ | 56,500 |
|
| 12.1 | % |
36
| Six Months Ended April 30, | |||||||||||
(Dollars in thousands, except average sales price) | 2026 |
| 2025 |
| Variance |
|
| Variance % | ||||
Northeast |
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding revenue | $ | 526,680 |
| $ | 541,029 |
| $ | (14,349) |
|
| (2.7) | % |
Income before income taxes | $ | 98,773 |
| $ | 79,793 |
| $ | 18,980 |
|
| 23.8 | % |
Homes delivered |
| 803 |
|
| 895 |
|
| (92) |
|
| (10.3) | % |
Average sales price | $ | 568,513 |
| $ | 601,188 |
| $ | (32,675) |
|
| (5.4) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast |
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding revenue | $ | 147,518 |
| $ | 126,278 |
| $ | 21,240 |
|
| 16.8 | % |
(Loss) income before income taxes | $ | (8,596) |
| $ | 606 |
| $ | (9,202) |
|
| (1,518.5) | % |
Homes delivered |
| 307 |
|
| 277 |
|
| 30 |
|
| 10.8 | % |
Average sales price | $ | 480,208 |
| $ | 455,018 |
| $ | 25,190 |
|
| 5.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
West |
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding revenue | $ | 578,749 |
| $ | 652,339 |
| $ | (73,590) |
|
| (11.3) | % |
(Loss) income before income taxes | $ | (22,718) |
| $ | 22,413 |
| $ | (45,131) |
|
| (201.4) | % |
Homes delivered |
| 1,123 |
|
| 1,367 |
|
| (244) |
|
| (17.8) | % |
Average sales price | $ | 512,918 |
| $ | 463,149 |
| $ | 49,769 |
|
| 10.7 | % |
Northeast - Homebuilding revenue decreased 2.0% for the three months ended April 30, 2026 compared to the same period in the prior year. The decrease for the three months ended April 30, 2026 was attributed to a 14.2% decrease in homes delivered and a 1.5% decrease in average sales price, partially offset by a $34.5 million increase in land sales and other revenue. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes and townhomes in lower-end submarkets of the segment for the three months ended April 30, 2026 compared to some communities delivering higher priced, larger single family homes and townhomes in higher-end submarkets of the segment for the three months ended April 30, 2025, which were no longer delivering in the second quarter of the current year.
Income before income taxes increased $3.5 million to $41.0 million for the three months ended April 30, 2026 as compared to the same period in the prior year. This was primarily due to the $34.5 million increase in land sales and other revenue, partially offset by a decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.
Homebuilding revenue decreased 2.7% for the six months ended April 30, 2026 compared to the same period in the prior year. The decrease for the six months ended April 30, 2026 was attributed to a 10.3% decrease in homes delivered and a 5.4% decrease in average sales price, partially offset by a $67.2 million increase in land sales and other revenue. The decrease in the average sales price was the result of new communities delivering lower priced, smaller single family homes, townhomes and affordable-housing homes in lower-end submarkets of the segment for the six months ended April 30, 2026 compared to some communities delivering higher priced, larger single family homes and townhomes in higher-end submarkets of the segment for the six months ended April 30, 2025, which we are no longer delivering in the current year.
Income before income taxes increased $19.0 million to $98.8 million for the six months ended April 30, 2026 as compared to the same period in the prior year. This was primarily due to the $67.2 million increase in land sales and other revenue discussed above, partially offset by a decrease in gross margin percentage.
Southeast – Homebuilding revenue decreased 1.9% for the three months ended April 30, 2026 compared to the same period in the prior year. The decrease for the three months ended April 30, 2026 was attributed to a 2.6% decrease in homes delivered, while the average sales price was relatively flat with a 0.7% increase.
Income before income taxes decreased $6.2 million to a loss of $5.1 million for the three months ended April 30, 2026 compared to the same period in the prior year. This was primarily due to a $4.0 million increase in inventory impairments and land option write-offs, a $1.8 million decrease in income from unconsolidated joint ventures and a decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.
Homebuilding revenue increased 16.8% for the six months ended April 30, 2026 compared to the same period in the prior year. The increase was due to a 10.8% increase in homes delivered and a 5.5% increase in average sales price. The increase in average sales price was the result of new communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for the six months ended April 30, 2026 compared to some communities delivering lower priced, smaller single family homes and build-for-rent homes in lower-end submarkets of the segment for the six months ended April 30, 2025, which we are no longer delivering in the current year.
Income before income taxes decreased $9.2 million to a loss of $8.6 million for the six months ended April 30, 2026 compared to the same period in the prior year. This was primarily due to a $5.1 million decrease in income from unconsolidated joint ventures, a $5.3 million increase in inventory impairments and land option write-offs, along with a decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.
37
West – Homebuilding revenue decreased 4.7% for the three months ended April 30, 2026 compared to the same period in the prior year. The decrease was due to a 12.2% decrease in homes delivered and a $10.7 million decrease in land sales and other revenue, partially offset by a 12.1% increase in average sales price. The increase in average sales price was the result of new communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for the three months ended April 30, 2026 compared to some communities delivering lower priced, smaller single family homes and townhomes in lower-end submarkets of the segment for the three months ended April 30, 2025, which we are no longer delivering in the current year.
Income before income taxes decreased $24.6 million to a loss of $11.3 million for the three months ended April 30, 2026 compared to the same period in the prior year. This is primarily due to the decrease in homebuilding revenue discussed above, a $3.6 million decrease in income from unconsolidated joint ventures, a $3.3 million increase in inventory impairments and land option write-offs and a significant decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.
Homebuilding revenue decreased 11.3% for the six months ended April 30, 2026 compared to the same period in the prior year. The decrease was due to a 17.8% decrease in homes delivered and a $16.5 million decrease in land sales and other revenue, partially offset by a 10.7% increase in average sales price. The increase in average sales price was the result of new communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for the six months ended April 30, 2026 compared to some communities delivering lower priced, smaller single family homes and townhomes in lower-end submarkets of the segment for the six months ended April 30, 2025, which we are no longer delivering in the current year.
Income before income taxes decreased $45.1 million to a loss of $22.7 million for the six months ended April 30, 2026 compared to the same period in the prior year. This is primarily due to the decrease in homebuilding revenue discussed above, a $7.1 million decrease in income from unconsolidated joint ventures, a $3.1 million increase in inventory impairments and land option write-offs and a significant decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.
Financial Services
Financial services consists primarily of originating mortgages from our home buyers, selling such mortgages in the secondary market, and title insurance activities. We use mandatory investor commitments and forward sales of mortgage-backed securities (“MBS”) to hedge our mortgage-related interest rate exposure on agency and government loans. For the six months ended April 30, 2026 and 2025, Federal Housing Administration and Veterans Administration (“FHA/VA”) loans represented 35.5% and 40.6%, respectively, of our total loans. For the six months ended April 30, 2026 compared to the same period in the prior year, our conforming conventional loan originations as a percentage of our total loans increased from 58.5% to 62.9%. The origination of loans which exceed conforming conventions increased from 0.9% to 1.6% for the six months ended April 30, 2026 compared to the same period in the prior year.
During the three and six months ended April 30, 2026 and 2025, financial services provided $10.0 million and $15.8 million of income before income taxes, respectively, compared to $8.4 million and $11.9 million for the same periods in the prior year. The increase in financial services income before income taxes for the three and six months ended April 30, 2026 compared to the same periods in the prior year was primarily due to an increase in the basis point spread between the loans originated and the implied rate from our sale of the loans. In the markets served by our wholly owned mortgage banking subsidiaries, 83.6% and 78.1% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the three months ended April 30, 2026 and 2025, respectively, and 81.6% and 79.2% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the six months ended April 30, 2026 and 2025, respectively.
38
Corporate General and Administrative
Corporate general and administrative expenses include operations at our headquarters in New Jersey. These expenses include payroll, stock compensation, facility costs and rent and other costs associated with our executive offices, legal expenses, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, national and digital marketing, construction services and administration of insurance, quality and safety. Corporate general and administrative expenses decreased to $27.0 million for the three months ended April 30, 2026 compared to $29.5 million for the three months ended April 30, 2025 and decreased to $60.7 million for the six months ended April 30, 2026 compared to $62.2 million for the six months ended April 30, 2025. The decrease for the three months ended April 30, 2026 was primarily due to a decrease in bonus expense due to lower profitability. The decrease in the six months ended April 30, 2026 compared to the same period in the prior year was primarily due to lower stock compensation expense compared to the same period in the prior year and.
(Loss) Income from Unconsolidated Joint Ventures
Income from unconsolidated joint ventures consists of our share of the earnings or losses of our unconsolidated joint ventures. Income from unconsolidated joint ventures decreased $10.1 million to a loss of $1.1 million for the three months ended April 30, 2026 and decreased $15.9 million to $2.3 million for the six months ended April 30, 2026 compared to the same periods in the prior year. The decrease was primarily due to less open for sale unconsolidated joint venture communities leading to fewer deliveries. Additionally, several joint venture communities are currently in the early stages of development and incurring typical start-up costs ahead of first deliveries.
Other Interest
Other interest increased $3.3 million to $12.5 million for the three months ended April 30, 2026 compared to the same quarter of the prior year and increased $6.0 million to $24.6 million for the six months ended April 30, 2026 compared to the same period of the prior year. Other interest increased primarily due to an increase in communities in planning, along with higher model lease financing activity during the period.
Income Taxes
For the three months ended April 30, 2026 and 2025, we recorded income tax expense of $0.9 million and $6.8 million, respectively. For the six months ended April 30, 2026 and 2025, we recorded income tax expense of $8.8 million and $18.5 million, respectively. For both the three and six months ended April 30, 2026 and 2025, the expense was primarily due to federal and state tax expense on income (loss) before income taxes and permanent differences, partially offset by energy home credits. Federal tax expense is not paid in cash as it is offset by the use of our existing NOL carryforwards.
Capital Resources and Liquidity
Overview
Our total liquidity at April 30, 2026 was $442.0 million, including $310.9 million in homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility. We believe that our cash on hand together with available borrowings on our senior secured revolving credit facility will be sufficient for at least the next 12 months to finance our working capital requirements.
We have historically funded our homebuilding and financial services operations with cash flows from operating activities, borrowings under our credit facilities, the issuance of new debt and equity securities, and other financing activities. We may not be able to obtain desired financing even if market conditions, including then-current market available interest rates (in recent years, we have not been able to access the traditional capital and bank lending markets at competitive interest rates due to our highly leveraged capital structure), would otherwise be favorable, which could impact our ability to grow our business.
Operating, Investing and Financing Cash Flow Activities
We spent $413.0 million on domestic land and land development during the first half of fiscal 2026. After land and land development spending and all other operating activities, including revenue received from deliveries, cash from operations was $73.8 million. During the first half of fiscal 2026, cash used in investing activities was $31.3 million, primarily due to a new joint venture entered into during the first half of fiscal 2026, along with spending on capitalized software, partially offset by net cash acquired through acquisitions. Cash used in financing activities was $10.8 million during the first half of fiscal 2026, primarily due to net payments for nonrecourse mortgage financings, net payments for model sale leaseback financings, treasury stock purchases and payments of preferred dividends, partially offset by net proceeds from our mortgage warehouse lines of credit and net proceeds from land banking financings. We intend to continue to use nonrecourse mortgages, model sale leasebacks, joint ventures, and, subject to covenant restrictions in our debt instruments, land banking programs as our business needs dictate.
Our cash uses during the six months ended April 30, 2026 and 2025 were for operating expenses, land purchases, land deposits, land development, construction spending, nonrecourse mortgage transactions, model sale leasebacks, state income taxes, interest payments, preferred dividends, equity repurchases, investments in unconsolidated joint ventures and acquisitions. During these periods, we provided for our cash requirements from available cash on hand, home and land sales, land banking transactions, income from unconsolidated joint ventures, financial service revenues and other revenues.
39
Our net income historically does not approximate cash flow from operating activities. The difference between net income and cash flow from operating activities is primarily caused by changes in inventory levels together with changes in receivables, prepaid expenses and other assets, mortgage loans held for sale, accrued interest, deferred income taxes, accounts payable and other liabilities, and noncash charges relating to depreciation, stock compensation and impairments. When we are expanding our operations, inventory levels, prepaid expenses and other assets increase, causing cash flow from operating activities to decrease. Certain liabilities also increase as operations expand and partially offset the negative effect on cash flow from operations caused by the increase in inventory, prepaid expenses and other assets. Similarly, as our mortgage operations expand, net income from these operations increases, but for cash flow purposes, net income is partially offset by the net change in mortgage assets and liabilities. The opposite is true as our investment in new land purchases and development of new communities decrease, causing us to generate positive cash flow from operations.
Debt Transactions
Senior notes and credit facilities balances as of April 30, 2026 and October 31, 2025, were as follows:
| April 30, |
| October 31, | ||
(In thousands) | 2026 |
| 2025 | ||
Senior Notes | $ | 924,968 |
| $ | 924,968 |
Senior Secured Revolving Credit Facility (1) |
| - |
|
| - |
Less: Net (discounts), premiums and unamortized debt issuance costs |
| (23,069) |
|
| (24,250) |
Total senior notes and credit facilities, net of discounts, premiums and unamortized debt issuance costs | $ | 901,899 |
| $ | 900,718 |
(1) At April 30, 2026, provides for up to $125.0 million in aggregate amount of senior secured first lien revolving loans. The revolving loans under the revolving credit facility have a maturity of June 30, 2028 and borrowings bear interest, at K. Hovnanian’s option, at either (i) a term secured overnight financing rate (subject to a floor of 3.00%) plus an applicable margin of 4.50% or (ii) an alternate base rate (subject to a floor of 3.00%) plus an applicable margin of 3.50%. In addition, K. Hovnanian will pay an unused commitment fee on the undrawn revolving commitments at a rate of 1.00% per annum.
Except for K. Hovnanian, the issuer of the notes and borrower under the credit agreement governing our secured revolving credit facility (the "Secured Credit Facility"), our home mortgage subsidiaries, certain of our title insurance subsidiaries, joint ventures and subsidiaries holding interests in our joint ventures, we and each of our subsidiaries are guarantors of the Secured Credit Facility and senior notes outstanding at April 30, 2026 (collectively, the “Notes Guarantors”).
40
The credit agreement governing the Secured Credit Facility and the indentures governing the senior notes (together, the “Debt Instruments”) outstanding at April 30, 2026 do not contain any financial maintenance covenants, but do contain restrictive covenants that limit, among other things, the ability of HEI and certain of its subsidiaries, including K. Hovnanian, to incur (including through exchanges or certain other types of transactions) indebtedness, pay dividends, and make distributions on common and preferred stock, repay/repurchase certain indebtedness prior to its respective stated maturity, repurchase common and preferred stock, make other restricted payments (including investments), sell certain assets (including in certain land banking transactions), incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets and enter into certain transactions with affiliates. The Debt Instruments also contain customary events of default which would permit the lenders or holders thereof to exercise remedies with respect to the collateral (as applicable), declare the loans (the “Secured Revolving Loans”) made under the Credit Agreement, dated as of October 31, 2019, as amended, by and among K. Hovnanian, the Company, the other guarantors party thereto, Wilmington Trust, National Association, as administrative agent, and the lenders party thereto (the “Secured Credit Agreement”) or notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Secured Revolving Loans or notes or other material indebtedness, cross default to other material indebtedness, the failure to comply with agreements and covenants and specified events of bankruptcy and insolvency and, with respect to the Secured Revolving Loans, material inaccuracy of representations and warranties, a change of control, the failure of the documents granting security for the obligations under the Secured Credit Agreement to be in full force and effect, and the failure of the liens on any material portion of the collateral securing the obligations under the Secured Credit Agreement to be valid and perfected. As of April 30, 2026, we believe we were in compliance with the covenants of the Debt Instruments.
Under the terms of our Debt Instruments, we have the right to make certain redemptions and prepayments and, depending on market conditions, our strategic priorities and covenant restrictions, may do so from time to time. We also continue to analyze and evaluate our capital structure and explore transactions to strengthen our balance sheet, including those that reduce leverage, interest rates and/or extend maturities, and will seek to do so with the right opportunity. We may also continue to make debt or equity purchases and/or exchanges from time to time through tender offers, exchange offers, redemptions, open market purchases, private transactions, or otherwise, or seek to raise additional debt or equity capital, depending on market conditions and covenant restrictions.
Due to covenant restrictions in our Debt Instruments, we may be limited in the amount of debt we can incur, even if market conditions, including then-current market available interest rates (prior to the fourth quarter of fiscal 2025, we had not been able to access the traditional capital and bank lending markets at competitive interest rates for some time due to our highly leveraged capital structure), would otherwise be favorable, which could also impact our ability to grow our business.
See Note 12 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of K. Hovnanian’s Debt Instruments, including information with respect to the collateral securing our Secured Credit Agreement.
Mortgages and Notes Payable
We had nonrecourse mortgage loans for certain communities totaling $32.7 million and $29.5 million, net of debt issuance costs, as of April 30, 2026 and October 31, 2025, respectively, which are secured by the related real property, including any improvements, with an aggregate book value of $55.2 million and $113.9 million, respectively. The weighted-average interest rate on these obligations was 7.2% and 7.4% at April 30, 2026 and October 31, 2025, respectively, and the mortgage loan payments primarily correspond to home deliveries.
Our wholly owned mortgage banking subsidiary, K. Hovnanian Mortgage, originates mortgage loans primarily from the sale of our homes. Such mortgage loans and related servicing rights are sold in the secondary mortgage market within a short period of time. K. Hovnanian Mortgage finances the origination of mortgage loans through various master repurchase agreements, which are recorded in "Financial services" liabilities on the Condensed Consolidated Balance Sheets. The loans are secured by the mortgages held for sale and are repaid when we sell the underlying mortgage loans to permanent investors. As of April 30, 2026 and October 31, 2025, we had an aggregate of $101.6 million and $94.3 million, respectively, outstanding under several of K. Hovnanian Mortgage’s short-term borrowing facilities.
See Note 11 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of these agreements.
41
Equity
On December 18, 2024, our Board of Directors (the "Board") authorized an incremental increase to our repurchase program and on April 11, 2025, the Board authorized another increase to our repurchase program, such that, inclusive of any amounts remaining under the existing repurchase authorization, as of April 11, 2025, we were authorized to repurchase up to $30.6 million of our Class A common stock. On February 27, 2026, the Board further authorized an incremental increase of $50.0 million to our repurchase program, such that, inclusive of any amounts remaining under the existing repurchase authorization, as of February 27, 2026, we were authorized to repurchase up to $67.4 million of our Class A common stock. Under the program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual dollar amount repurchased will depend on a variety of factors, including legal requirements, price, future tax implications and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.
During the six months ended April 30, 2026, we repurchased 175,905 shares under the stock repurchase program, with a market value of $18.5 million, or $104.98 per share. During the six months ended April 30, 2025, we repurchased 257,908 shares under the stock repurchase program, with a market value of $30.1 million, or $116.70 per share. As of April 30, 2026, $57.9 million of our Class A common stock was available to be purchased under the stock repurchase program.
On July 12, 2005, we issued 5,600 shares of 7.625% Series A preferred stock, with a liquidation preference of $25,000 per share. Dividends on the Series A preferred stock are not cumulative and are payable at an annual rate of 7.625%. The Series A preferred stock is not convertible into the Company’s common stock and is redeemable in whole or in part at our option at the liquidation preference of the shares. The Series A preferred stock is traded as depositary shares, with each depositary share representing 1/1000th of a share of Series A preferred stock. We paid dividends of $2.7 million and $5.3 million on the Series A preferred stock for each of the three and six months ended April 30, 2026 and 2025, respectively.
Unconsolidated Joint Ventures
We have investments in unconsolidated joint ventures in various markets where our homebuilding operations are located. Investments in and advances to unconsolidated joint ventures decreased $15.0 million to $148.5 million at April 30, 2026 compared to October 31, 2025. The decrease was primarily due the consolidation of a previously unconsolidated joint venture during the period and an increase in our share of losses recognized for an existing unconsolidated joint venture, partially offset by a new joint venture entered into during the first quarter of fiscal 2026, along with an increase in our share of income recognized for two of our existing unconsolidated joint ventures during the period. As of April 30, 2026 and October 31, 2025, we had investments in five and six unconsolidated homebuilding joint ventures, respectively.
Inventories
Total inventory, excluding consolidated inventory not owned, increased $49.9 million to $1.4 billion at April 30, 2026 compared to October 31, 2025. Total inventory, excluding consolidated inventory not owned, increased by $116.5 million from the acquisition of a controlling interest and resulting consolidation of KSA and increased $1.3 million in the West. These increases were partially offset by decreases of $10.4 million in the Northeast and $57.5 million in the Southeast. The net decrease in our domestic inventory was primarily attributable to home deliveries, inventory impairments and land option write-offs, land sales, and inventory contributed to new unconsolidated joint ventures during the period, partially offset by new land purchases and land development. Substantially all homes under construction or completed and included in inventory at April 30, 2026 are expected to be delivered during the next six to nine months.
Consolidated inventory not owned, which consists of options related to land banking and model financing, increased $36.2 million from October 31, 2025 to April 30, 2026. The increase was primarily due to an increase in land banking transactions, partially offset by a decrease in the sale and leaseback of certain model homes during the period. We have land banking arrangements, whereby we sell land parcels to land bankers and they provide us with an option to purchase finished lots on a predetermined schedule. Because of our options to repurchase these parcels, these transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheet, at April 30, 2026, included inventory of $296.1 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $180.2 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions. In addition, we sell and lease back certain of our model homes with the right to participate in the potential profit when each home is sold to a third-party at the end of the respective lease. As a result of our continued involvement and the ability to repurchase model homes with below market options, these sale and leaseback transactions are considered a financing rather than a sale. Therefore, our Condensed Consolidated Balance Sheet, at April 30, 2026, included inventory of $73.0 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $73.2 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions.
42
The following tables summarize home sites included in our total residential real estate. The decrease in total domestic home sites available at April 30, 2026 compared to October 31, 2025 is attributable to delivering homes and terminating certain option agreements, partially offset by acquiring new land parcels during the period.
|
|
|
|
| Active Selling |
|
| Proposed |
|
|
|
|
| Active Selling |
|
| Communities |
|
| Developable |
|
| Total |
|
| Communities(1) |
|
| Homes |
|
| Homes |
|
| Homes |
April 30, 2026: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
| 44 |
|
| 4,982 |
|
| 13,864 |
|
| 18,846 |
Southeast |
| 24 |
|
| 1,840 |
|
| 3,712 |
|
| 5,552 |
West |
| 57 |
|
| 6,010 |
|
| 3,240 |
|
| 9,250 |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic subtotal |
| 125 |
|
| 12,832 |
|
| 20,816 |
|
| 33,648 |
|
|
|
|
|
|
|
|
|
|
|
|
KSA |
| 3 |
|
| 1,241 |
|
| 1,827 |
|
| 3,068 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total |
| 128 |
|
| 14,073 |
|
| 22,643 |
|
| 36,716 |
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated joint ventures (2) |
| 23 |
|
| 2,522 |
|
| 467 |
|
| 2,989 |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Owned |
|
|
|
| 3,440 |
|
| 1,209 |
|
| 4,649 |
Domestic Optioned |
|
|
|
| 9,376 |
|
| 19,607 |
|
| 28,983 |
KSA Owned |
|
|
|
| - |
|
| 340 |
|
| 340 |
KSA Optioned |
|
|
|
| 1,241 |
|
| 1,487 |
|
| 2,728 |
Construction to permanent financing lots |
|
|
|
| 16 |
|
| - |
|
| 16 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total |
|
|
|
| 14,073 |
|
| 22,643 |
|
| 36,716 |
|
|
|
|
| Active Selling |
|
| Proposed |
|
|
|
|
| Active Selling |
|
| Communities |
|
| Developable |
|
| Total |
|
| Communities(1) |
|
| Homes |
|
| Homes |
|
| Homes |
October 31, 2025: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast |
| 46 |
|
| 4,844 |
|
| 14,138 |
|
| 18,982 |
Southeast |
| 27 |
|
| 2,218 |
|
| 3,863 |
|
| 6,081 |
West |
| 67 |
|
| 6,853 |
|
| 3,969 |
|
| 10,822 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total |
| 140 |
|
| 13,915 |
|
| 21,970 |
|
| 35,885 |
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated joint ventures (2) |
| 20 |
|
| 3,631 |
|
| 2,294 |
|
| 5,925 |
|
|
|
|
|
|
|
|
|
|
|
|
Owned |
|
|
|
| 3,982 |
|
| 1,514 |
|
| 5,496 |
Optioned |
|
|
|
| 9,931 |
|
| 20,456 |
|
| 30,387 |
Construction to permanent financing lots |
|
|
|
| 2 |
|
| - |
|
| 2 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total |
|
|
|
| 13,915 |
|
| 21,970 |
|
| 35,885 |
| (1) | Active selling communities are open for sale communities with ten or more home sites available. We identify communities based on product type. Therefore, at times there are multiple communities at one land site. |
|
|
|
| (2) | Represents active selling communities and home sites for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated joint ventures. See Note 18 to the Condensed Consolidated Financial Statements for a further discussion of our unconsolidated joint ventures. |
43
The following table summarizes our started or completed unsold homes and models, excluding unconsolidated joint ventures, in substantially completed communities. The decrease in started or completed unsold homes from October 31, 2025 to April 30, 2026 is due to a concerted effort to manage inventory levels by aligning our starts pace with sales pace at each community.
|
| April 30, 2026 |
|
| October 31, 2025 | ||||||||||||
|
| Unsold |
|
|
|
|
|
|
|
| Unsold |
|
|
|
|
|
|
|
| Homes |
|
| Models |
|
| Total |
|
| Homes |
|
| Models |
|
| Total |
Northeast |
| 172 |
|
| 17 |
|
| 189 |
|
| 257 |
|
| 23 |
|
| 280 |
Southeast |
| 127 |
|
| 13 |
|
| 140 |
|
| 125 |
|
| 18 |
|
| 143 |
West |
| 432 |
|
| 20 |
|
| 452 |
|
| 525 |
|
| 23 |
|
| 548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic total (1) |
| 731 |
|
| 50 |
|
| 781 |
|
| 907 |
|
| 64 |
|
| 971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Started or completed unsold homes and models per domestic active selling communities (2) |
| 5.8 |
|
| 0.4 |
|
| 6.2 |
|
| 6.5 |
|
| 0.4 |
|
| 6.9 |
| (1) | At April 30, 2026, KSA had no started unsold homes or models. |
| (2) | Domestic active selling communities (which are communities that are open for sale with ten or more home sites available) were 125 at April 30, 2026 and 140 at October 31, 2025. This ratio does not include substantially completed communities, which are communities with less than ten home sites available. |
Other Balance Sheet Fluctuations
Goodwill
Goodwill increased to $31.7 million at April 30, 2026 from October 31, 2025 resulting from the acquisition of a controlling interest in KSA in the first quarter of fiscal 2026. See Note 18 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for further details on the KSA purchase price allocation. There was no goodwill recorded at October 31, 2025.
Customer Deposits
Customer deposits increased $159.8 million to $206.1 million at April 30, 2026 compared to October 31, 2025. The increase was primarily due to KSA stage payments that we receive as a home is constructed and recorded as deferred revenue.
Financial Services Assets and Liabilities
Financial services assets increased $7.3 million to $158.5 million at April 30, 2026, compared to October 31, 2025. Financial services assets consist primarily of residential mortgage receivables held for sale of which $120.4 million and $109.8 million at April 30, 2026 and October 31, 2025, respectively, were being temporarily warehoused and are awaiting sale in the secondary mortgage market. The increase in mortgage loans held for sale from October 31, 2025 was primarily related to an increase in the volume of loans originated during the second quarter of fiscal 2026 compared to the fourth quarter of fiscal 2025 and an increase in the average loan value.
Financial services liabilities increased $6.2 million to $137.0 million at April 30, 2026 compared to October 31, 2025. The increase was primarily due to an increase in amounts outstanding under our mortgage warehouse lines of credit and directly correlates to the increase in the volume of mortgage loans held for sale during the period.
Inflation
The annual rate of inflation in the United States was 3.8% in April 2026, as measured by the Consumer Price Index, which is an increase from January 2026, but much improved from its peak of 9.1% in June 2022. Inflation has a long-term effect, because higher costs for land, materials and labor results in increasing sales prices of our homes. Historically, these price increases have been commensurate with the general rate of inflation in our housing markets and have not had a significant adverse effect on the sale of our homes. A significant risk faced by the housing industry generally is that rising house construction costs, including land and interest costs, could substantially outpace increases in the income of potential purchasers and therefore limit our ability to raise home sale prices, which may result in lower gross margins.
Inflation has a lesser short-term effect, because we generally negotiate fixed-price contracts with many, but not all, of our subcontractors and material suppliers for the construction of our homes. These prices usually are applicable for a specified number of residential buildings or for a time period of between three to 12 months. Construction costs for residential buildings represented approximately 47.8% of our homebuilding cost of sales for the six months ended April 30, 2026.
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Critical Accounting Policies
As disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025, our most critical accounting policies relate to inventories, unconsolidated joint ventures, warranty and construction defect reserves and income taxes. Since October 31, 2025, there have been no significant changes to those critical accounting policies.
Safe Harbor Statement
All statements in this Quarterly Report on Form 10-Q that are not historical facts should be considered as “Forward-Looking Statements” within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include but are not limited to statements related to the Company's goals and expectations with respect to its financial results for future financial periods. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to:
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| ● | Changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; |
| ● | Shortages in, and price fluctuations of, raw materials and labor, including due to geopolitical events (such as the Iran war), changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with, and retaliatory measures taken by other countries, and changes in immigration laws or the enforcement thereof and trends in labor migration; |
| ● | Fluctuations in interest rates and the availability of mortgage financing, including as a result of instability in the banking sector; |
| ● | Increases in inflation; |
| ● | Adverse weather and other environmental conditions and natural or man-made disasters; |
| ● | The seasonality of the Company’s business; |
| ● | The availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; |
| ● | Reliance on, and the performance of, subcontractors; |
| ● | Regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; |
| ● | Increases in cancellations of agreements of sale; |
| ● | Changes in tax laws affecting the after-tax costs of owning a home; |
| ● | Legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; |
| ● | Levels of competition; |
| ● | Utility shortages and outages or rate fluctuations; |
| ● | Information technology failures and data security breaches; |
| ● | Negative publicity; |
| ● | Global economic and political instability; |
| ● | High leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; |
| ● | Availability and terms of financing to the Company; |
| ● | The Company’s sources of liquidity; |
| ● | Changes in credit ratings; |
| ● | Government regulation, including regulations concerning the development of land, the home building, sales and customer financing processes, tax laws and environmental, health and safety matters; |
| ● | Potential liability as a result of the past or present use of hazardous materials; |
| ● | Operations through unconsolidated joint ventures with third parties; |
| ● | Significant influence of the Company’s controlling stockholders; |
| ● | Availability of net operating loss carryforwards; and |
| ● | Loss of key management personnel or failure to attract qualified personnel. |
Certain risks, uncertainties and other factors are described in detail in Part I, Item 1 “Business” and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Quarterly Report on Form 10-Q.
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Substantially all of our long-term debt requires fixed interest payments and we have limited exposure to variable rates. In connection with our mortgage operations, mortgage loans held for sale and the associated mortgage warehouse lines of credit under our Master Repurchase Agreements are subject to interest rate risk; however, such obligations reprice frequently and are short-term in duration. In addition, we hedge the interest rate risk on mortgage loans by obtaining forward commitments from private investors. Accordingly, the interest rate risk from mortgage loans is not significant. We do not use financial instruments to hedge interest rate risk except with respect to mortgage loans. The following table sets forth as of April 30, 2026, our long-term debt obligations, principal cash flows by scheduled maturity, weighted-average interest rates and estimated fair value (“FV”).
| Long Term Debt as of April 30, 2026 by Fiscal Year of Maturity Date | ||||||||||||||||||||||
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| FV at | |
(Dollars in thousands) | 2026 |
| 2027 |
| 2028 |
| 2029 |
| 2030 |
| Thereafter |
| Total |
| 4/30/2026 | ||||||||
Long term debt(1)(2): |
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Fixed rate | $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | - |
| $ | 924,968 |
| $ | 924,968 |
| $ | 922,846 |
Weighted average interest rate |
| - | % |
| - | % |
| - | % |
| - | % |
| - | % |
| 8.10 | % |
| 8.10 |
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(1) | Does not include mortgage warehouse lines of credit made under our Master Repurchase Agreements. |
(2) | Does not include $32.7 million of nonrecourse mortgages secured by inventory. These mortgages have various maturities spread over the next two to three years and are paid off as homes are delivered. In addition, it does not include our $125.0 million Secured Credit Facility under which there were no borrowings outstanding as of April 30, 2026. The revolving loans under the Secured Credit Facility have a maturity of June 30, 2028 and borrowings bear interest, at K. Hovnanian’s option, at either (i) a term SOFR (subject to a floor of 3.00%) plus an applicable margin of 4.50% or (ii) an alternate base rate (subject to a floor of 3.00%) plus an applicable margin of 3.50%. In addition, K. Hovnanian pays an unused commitment fee on the undrawn revolving commitments at a rate of 1.00% per annum. |
Item 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of April 30, 2026. Based upon that evaluation and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the design and operation of the Company’s disclosure controls and procedures are effective to accomplish their objectives.
There was no change in the Company’s internal control over financial reporting that occurred during the quarter ended April 30, 2026, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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For information with respect to our legal proceedings, see Note 7 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Recent Sales of Unregistered Equity Securities
None.
Issuer Purchases of Equity Securities
On December 18, 2024, the Board authorized an incremental increase to our repurchase program and on April 11, 2025, the Board authorized another increase to our repurchase program, such that, inclusive of any amounts remaining under the existing repurchase authorization, as of April 11, 2025, we were authorized to repurchase up to $30.6 million of our Class A common stock. On February 27, 2026, our Board further authorized an incremental increase of $50.0 million to our repurchase program, such that, inclusive of any amounts remaining under the existing repurchase authorization, as of February 27, 2026, we were authorized to repurchase up to $67.4 million of our Class A common stock. Under the program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual dollar amount repurchased will depend on a variety of factors, including legal requirements, price, future tax implications and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date. As of April 30, 2026, $57.9 million of our Class A common stock was available to be purchased under the stock repurchase program.
The following table provides information relating to the Company’s repurchase of common stock for the second quarter of fiscal 2026.
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| Total Number of Shares Purchased |
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| Average Price Paid Per Share |
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| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
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| Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
February 1, 2026 through February 28, 2026 |
| - |
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| - |
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| - |
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| $67,402,978 |
March 1, 2026 through March 31, 2026 |
| 63,201 |
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| $104.62 |
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| 63,201 |
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| $60,790,684 |
April 1, 2026 through April 30, 2026 |
| 27,306 |
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| $104.55 |
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| 27,306 |
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| $57,935,884 |
During the three months ended April 30, 2026, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company or a " trading arrangement" or " trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
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31(a) | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. |
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31(b) | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. |
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32(a) | |
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32(b) | |
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101 | The following financial information from our Quarterly Report on Form 10-Q for the quarter ended April 30, 2026, formatted in inline Extensible Business Reporting Language (Inline XBRL): (i) the Condensed Consolidated Balance Sheets at April 30, 2026 and October 31, 2025, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended April 30, 2026 and 2025, (iii) the Condensed Consolidated Statements of Changes in Equity for the three and six months ended April 30, 2026 and 2025, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended April 30, 2026 and 2025, and (v) the Notes to Condensed Consolidated Financial Statements. |
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104 | Cover Page from our Quarterly Report on Form 10-Q for the three months ended April 30, 2026, formatted in Inline XBRL (and contained in Exhibit 101). |
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| *Management contracts or compensation plans or arrangements. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HOVNANIAN ENTERPRISES, INC.
(Registrant)
| DATE: | June 2, 2026 |
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| /s/ ARA K. HOVNANIAN |
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| Ara K. Hovnanian |
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| Chairman of the Board, Chief Executive Officer and Director |
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| (Principal Executive Officer) |
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| DATE: | June 2, 2026 |
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| /s/ BRAD O’CONNOR |
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| Brad O’Connor |
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| Chief Financial Officer |
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| (Principal Financial Officer and Principal Accounting Officer) |
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CERTIFICATIONS
Exhibit 31(a)
I, Ara K. Hovnanian, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended April 30, 2026 of Hovnanian Enterprises, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: June 2, 2026 |
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/s/ ARA K. HOVNANIAN |
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Ara K. Hovnanian |
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Chairman and Chief Executive Officer |
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CERTIFICATIONS
Exhibit 31(b)
I, Brad O’Connor, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended April 30, 2026 of Hovnanian Enterprises, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: June 2, 2026 |
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/s/ BRAD O’CONNOR |
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Brad O’Connor |
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Chief Financial Officer |
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Exhibit 32(a)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Hovnanian Enterprises, Inc. (the “Company”) on Form 10‑Q for the period ended April 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ara K. Hovnanian, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: June 2, 2026 |
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/s/ ARA K. HOVNANIAN |
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Ara K. Hovnanian |
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Chairman and Chief Executive Officer |
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Exhibit 32(b)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Hovnanian Enterprises, Inc. (the “Company”) on Form 10‑Q for the period ended April 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brad O’Connor, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: June 2, 2026 |
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/s/ BRAD O’CONNOR |
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Brad O’Connor |
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Chief Financial Officer |
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