Hovnanian Enterprises (HOV) Deutsche Bank 32nd Annual Leveraged Finance Conference summary

U.S. housing market trends

• Housing starts have remained below the long-term average since the Great Recession, with under-supply persisting despite a brief COVID-era rebound.

• Low production and limited listings are driven by high mortgage rates and homeowners locked into low-rate loans.

• Market activity is sensitive to interest rate changes, with sales picking up as rates decline.

Recent performance and operational strategy

• Performance has been strong since COVID, with significant balance sheet improvement and a broad product mix across regions.

• Community count increased from 132 to 146 sequentially, with controlled lots rising from 29,487 to 39,500 year-over-year.

• Asset-light strategy is emphasized, with 82% of lots under option, up from 46% in 2015.

• Inventory turnover is among the highest in the industry, supporting strong ROI and ROE.

Sales, incentives, and customer trends

• Contracts were up 8% year-over-year through July, with quarterly swings and a 23% increase in early Q4.

• Shifted to more quick move-in homes to meet demand for rate certainty and faster closings.

• Mortgage rate buydowns and price reductions are used as incentives, with some customers opting for lower prices over rate reductions.

• Affordability challenges have led to fewer options purchased and a shift to packaged home features to control costs.

• Average selling price has remained flat due to changes in product mix despite rising base prices.