RED BANK, N.J., Nov. 6 /PRNewswire-FirstCall/ -- Hovnanian Enterprises, Inc. today announced preliminary net contracts and deliveries for the fourth quarter ended October 31, 2007. The Company delivered 3,969 homes during its fourth quarter, a decrease, excluding home deliveries from unconsolidated joint ventures in both periods, of 19% from the same quarter a year ago.
Management continues to focus on improving its balance sheet and on generating cash flow; during the fourth quarter total debt was reduced by $390 million. The Company retired the remaining $140 million of its $150 million 10-1/2% senior notes and reduced the amount drawn under its $1.5 billion unsecured revolving credit facility by $250 million, from $456 million at July 31, 2007 to $206 million at October 31, 2007.
Net contracts for the quarter were 2,781 homes, a decrease, excluding net contracts from unconsolidated joint ventures in both periods, of 10% from last year's fourth quarter. During the month of October, the sales pace in most of the Company's markets significantly deteriorated when compared to the sales pace of recent months. Cancellations for the fiscal 2007 fourth quarter were 40% of gross contracts, compared to the cancellation rate of 35% for both the third quarter of 2007 and the fourth quarter of 2006.
The primary reason for the increase in the Company's cancellation rate is the tightening of mortgage underwriting standards, which has lead to some customers cancelling their contracts due to an inability to obtain mortgage loans. Contract backlog, as of October 31, 2007, excluding unconsolidated joint ventures, was 5,938 homes, a decrease of 30% from the same quarter a year ago.
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes.
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