Company: HOVVB
Filing Date: 2025-08-29
Form Type: 10-Q
Source: 0001753926-25-001413
Chunk: 13

Company: HOVNANIAN ENTERPRISES INC
Filing Date: 2025-08-29
Form: 10-Q
Item: Part I, Item 2
Chunk 13
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 million during both the three and nine months ended July 31, 2024. The impairments recorded for fiscal 2025 were for two communities in the Northeast segment and three communities in the West segment. The impairment recorded for fiscal 2024 was for one community in the West segment. We wrote-off residential land option, approval and engineering costs across each of our segments during the first three quarters of both fiscal 2025 and 2024.

Homebuilding: Selling, General and Administrative

Homebuilding selling, general and administrative (“SGA”) expenses increased $4.8 million to $55.8 million for the three months ended July 31, 2025 and increased $14.7 million to $161.1 million for the nine months ended July 31, 2025 compared to the same periods in the prior year. The increase for the three and nine months ended July 31, 2025 compared to the same periods in the prior year was primarily due to an increase in selling overhead from higher advertising costs and an increase in total compensation expense as a result of an increase in headcount from opening more communities along with the cost of annual merit increases. 

Homebuilding: Key Performance Indicators

Net Contracts Per Active Selling Community

Net contracts per active selling community for the three and nine months ended July 31, 2025 were 9.8 and 30.8, respectively, compared to 9.5 and 30.4 for the same periods in the prior year, respectively. Our reported level of sales contracts (net of cancellations) was impacted by increasing incentives and concessions to drive customer demand for QMI homes.

Contract Cancellation Rates

The following table provides historical quarterly cancellation rates, which represents the number of cancelled contracts in the quarter divided by the number of gross sales contracts executed in the quarter, excluding unconsolidated joint ventures:

 Quarter 

2025

2024

2023

2022

2021

 First 

16
%
 
14
%
 
30
%
 
14
%
 
17
%

 Second 

15
%
 
14
%
 
18
%
 
17
%
 
16
%

 Third 

19
%
 
17
%
 
16
%
 
27
%
 
16
%

 Fourth 

18
%

25
%

41
%

15
%

34