Hovnanian Enterprises reported a fiscal third-quarter 2026 earnings miss, sending its shares down 12.74% to $111.40 in premarket trading on Thursday. The homebuilder posted revenue of $706 million, exceeding the midpoint of its guidance but falling short of the $723.5 million analyst consensus by $17.5 million, or roughly 2.4%.
Adjusted pre-tax income turned negative at $(2) million, missing guidance and marking the company’s first quarterly shortfall in 23 consecutive quarters. Adjusted EBITDA totaled $32 million, within the guided range, while gross margin improved to 14.6%. Selling, general, and administrative expenses stood at 12.3% of revenue.
The company delivered 1,359 homes in the quarter, a decline of 57 from the prior-year period. Sales pace averaged 9.4 contracts per community, with 147 active communities at quarter-end. Quick Move-In inventory averaged 6.7 units per community, while option lots accounted for 87% of controlled lots—the highest percentage in company history.
Management highlighted ongoing challenges in the housing market. Ara Hovnanian, chairman and CEO, noted that while website traffic remained strong, buyers continued to delay final purchase decisions. He cited July 2026 website visits as the highest since 2019, excluding one month, and the strongest in the final two weeks of the month.
Brad O’Connor, chief financial officer, emphasized disciplined underwriting, stating the company would not pursue growth at returns that fail to meet its standards despite attractive opportunities. The company’s backlog conversion ratio stood at 74%, above the historical average of 57% since Q3 1998.
For the fourth quarter, Hovnanian guided revenue between $800 million and $900 million, with adjusted gross margin of 15% to 16.5%, SG&A expenses of 10.5% to 11.5% of revenue, and adjusted EBITDA of $50 million to $65 million. Adjusted pre-tax income is expected between $15 million and $30 million, with joint venture income projected at $10 million to $20 million.
Shares had closed at $127.67 on Wednesday, up 2.55% for the session, and had traded in a 52-week range of $91.52 to $162.06.
