Hovnanian Enterprises, one of the nation’s largest homebuilders, swung to a loss in its fiscal third quarter as revenue fell and margins narrowed, the latest sign that higher mortgage rates and cautious buyers are squeezing the homebuilding industry. The Matawan, New Jersey-based company reported total revenues of $705.7 million for the quarter ended July 31, down 12% from $800.6 million a year earlier, according to results filed with the Securities and Exchange Commission on Thursday.
The company posted a net loss available to common stockholders of $4.5 million, or 70 cents per diluted share, reversing a profit of $1.99 per diluted share in the same quarter last year. Hovnanian said the results were generally in line with the guidance it had issued.
Deliveries and margins under pressure
Hovnanian delivered 1,155 homes from its consolidated operations during the quarter, generating $622.6 million in home sales. Its homebuilding gross margin, before land charges, narrowed to 14.6% from 17.3% a year earlier β a reflection of the incentives and price adjustments builders have used to keep sales moving in a market where affordability has deteriorated.
Selling, general and administrative expenses totaled $86.9 million, or 12.3% of revenues. Adjusted EBITDA came in at $31.9 million, within the company’s guidance range.
“During the third quarter, we delivered results generally in line with guidance,” said Chairman and Chief Executive Ara K. Hovnanian, adding that the company remains focused on improving execution.
Backlog and demand
Net contracts, a measure of new orders, totaled 1,359 homes worth $760.2 million including joint ventures. Contract backlog stood at $881.9 million on a consolidated basis, or about $1.16 billion including joint ventures β up 5% in dollar value from a year earlier for the consolidated domestic business, a sign of underlying demand even as current deliveries slipped.
The builder ended the quarter with 123 consolidated communities open for sale, or 147 including joint ventures, and total liquidity of $379.8 million. It controlled 34,373 lots, 87% of them through options rather than outright ownership β a capital-light land strategy that many builders have adopted to limit risk in an uncertain market.
For the first nine months of fiscal 2026, total revenues were $2.01 billion, down from $2.16 billion in the same period a year earlier.
A tough stretch for builders
Hovnanian’s results echo a broader softening across the homebuilding sector. Builder sentiment has hovered near multi-year lows, single-family construction has cooled, and demand for mortgages on newly built homes has fallen. Larger builders have leaned on mortgage-rate buydowns and other incentives to sustain sales volumes, a strategy that supports deliveries but compresses margins β exactly the dynamic visible in Hovnanian’s narrower gross margin.
Not every builder has fared the same. Results across the industry this earnings season have been mixed: M/I Homes posted record quarterly contracts even as deliveries and profit declined, and Toll Brothers’ shares jumped on an earnings beat in what it called a tough market.
What it means: Hovnanian’s quarter captures the squeeze facing the industry: builders can still move homes, but increasingly only by sacrificing margin. The 5% rise in consolidated backlog value suggests demand has not collapsed, and management’s emphasis on execution points to a focus on protecting profitability rather than chasing volume. The path forward hinges on mortgage rates β a sustained decline would ease the need for costly incentives, while rates holding near 2026 highs would keep pressure on margins into the builder’s fiscal fourth quarter.
Hovnanian builds homes across a range of markets under the K. Hovnanian brand and is one of the oldest publicly traded homebuilders in the United States.
