Hovnanian Enterprises (HOV) investor relations material

Market environment and housing trends

• U.S. housing production has been underbuilt by 5.5 million starts compared to long-term averages, creating a significant supply shortfall.

• Existing home supply remains well below historical averages, driving more buyers to new home builders.

• Higher mortgage rates have locked many homeowners in place, further limiting existing home listings.

• Builders are offering mortgage rate buy downs to offset affordability challenges, a competitive advantage over existing home sellers.

• Market volatility is driven by economic news, job market shifts, and interest rate changes, impacting buyer psychology.

Operational strategy and geographic footprint

• Delivering around 6,000 homes annually, with plans to grow deliveries supported by an increase in controlled lots from 29,000 to 40,000 over two years.

• Operations span the Northeast, Southeast, Texas, Arizona, and California, with a diversified product mix across buyer segments.

• Diversification across product types, including first-time buyers and active adult communities, helps mitigate market segment risks.

• 80% of current sales are from spec homes (quick move-in), a shift from the previous build-to-order focus, improving efficiency and rate lock flexibility.

• Community count has remained stable at 146, with expectations for growth into 2026.

Financial performance and guidance

• Q3 revenues increased 11% year-over-year, but margins declined by nearly 500 basis points due to higher incentives.

• SG&A expenses decreased slightly, and pretax income rose over the prior year.

• Q4 guidance projects flat revenues, further margin compression, and higher pretax income due to a joint venture consolidation.

• Expected Q4 joint venture income is $8–12 million, with adjusted EBITDA between $77–87 million.