Tuesday, April 05, 2005

Hovnanian Playing A Numbers Game

The home builder Hovnanian Enterprises reported strong numbers this morning. "The dollar value of net contracts for March 2005 increased 22.4% over the same period in the previous year." But a closer look shows that increase was including sales at Cambridge Homes and Town & Country Homes, both of which were bought out in the same month.

So what was the companys result without the aquisitions? "Before accounting for contracts from (acquisitions) monthly net contracts showed a decline of 2.9 percent to 1,559." But hold on, if you check this table, you can clearly see that was a typo, and that the real decline was 7.3%.

Some more detail from Reuters, "The value of contracts in California sank 11 percent to $171.3 million, while the Northeast region saw contract value plunge 27 percent to $89.2 million on a steep drop in building activity."


At 8:46 AM, Blogger John Law said...

just when I arrived here, I also spied this on yahoo.


I'm new to the lingo, what are the values of contracts? the total $ value of all the contracts signed?

and I'm sure it was a typo!

At 9:01 AM, Blogger Ben Jones said...

(what are the values of contracts)The dollar amount of the contracts. Prices are still rising but the number of contracts are falling.

At 9:14 AM, Blogger John Law said...

I bet people are used to being frantic in searching for a home they aren't being smart and looking around. soon, they may realize there are more properties available so they can take their time and name their price.

At 10:16 AM, Anonymous marmico1 said...

All the numbers show is that unit sales declined (net of acquisitions) and that the price per unit sold rose.

Makes sense....8% unit sales decline year over year + 11% appreciation year over year (call it the average price rise in the markets that HOV builds in) equals a 3% revenue increase.

It's not a typo.

The important issue is:

Does the decline in unit sales inevitably "lead" to a decline in sales prices.

Or as the technicians in the stock market parrot: (declining) volume precedes (declining) price.

At 7:50 PM, Blogger Ben Jones said...

I don't follow your math. It is pretty obvious the writer took the number from the wrong column. 2.9 instead of 7.3..Ben


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