HOVNANIAN ENTERPRISES INC

Previous wording

During fiscal 2024 and continuing through thefirst half of fiscal 2025, mortgage rates fluctuated but still remain at a persistently high level. As a result, affordability generally remains challenging for homebuyers. We have stayed aggressive in our pricing, incentives and concessions in order to align with the current market.

Current wording

During fiscal 2024 and continuing through thefirst nine months of fiscal 2025, mortgage rates have fluctuated but still remain at a persistently high level. As a result, affordability generally remains challenging for homebuyers. We have stayed aggressive in our pricing, incentives and concessions in order to align with the current market.

Previous wording

Although the long-term fundamentals of the new home market remain favorable, during thefirst six months of fiscal 2025, volatility in the broader economy and affordability constraints caused many consumers to delay purchasing a new home. As a result of this more difficult sales environment, we experienced a decrease in net contracts compared to thefirst half of fiscal 2024. Even as mortgage rates increased and sales pace slowed, we were still able to increasenet prices in approximately 40% and 31% of our communities during thefirst and second quarters of fiscal 2025, respectively.

Current wording

Although the long-term fundamentals of the new home market remain favorable, during thefirst nine months of fiscal 2025, volatility in the broader economy and affordability constraints caused many consumers to delay purchasing a new home. As a result of this more difficult sales environment, we experienced a decrease in net contracts compared to thefirst nine months of fiscal 2024, although net contracts for the third quarter of fiscal 2025 increased from the prior year period. Even as mortgage rates increased and we focused on increasing sales pace versus price, we were still able to raisenet prices in approximately 40%,31% and 21% of our communities during the first, second and third quarters of fiscal 2025, respectively.

Previous wording

During the six months ended April 30, 2025, our cash position allowed us to spend $467.4 million on land purchases and land development for long-term growth, redeem $26.6 million of senior notes and repurchase $30.1 million of our common stock, and still have total liquidity of $202.4 million, including $74.0 million of homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility as of April 30, 2025.

Current wording

During the nine months ended July 31, 2025, our cash position allowed us to spend $660.0 million on land purchases and land development for long-term growth, redeem $26.6 million of senior notes, repurchase $30.1 million of our common stock, and still have total liquidity of $277.9 million, including $146.6 million of homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility as of July 31, 2025.

Previous wording

Information on our operating results for thethree and six months ended April 30, 2025 are as follows:

Current wording

Information on our operating results for thethree and nine months ended July 31, 2025 are as follows:

Previous wording

● Sale of homes revenues decreased to $650.3 million for thethree months ended April 30, 2025 from $686.9 million for thethree months ended April 30, 2024, and was flat at$1.3 billionfor the six months ended April 30, 2025 and 2024. There was a 0.2% and 8.2%increase in the number of home deliveries for thethree and six months ended April 30, 2025, compared to the same periods of the prior year, partially offset by a decrease in average price of 5.5% and 4.9% for thethree and six months ended April 30, 2025, compared to the same periods of the prior year. The increase in deliveries was primarily the result of an increase in community count, while the decrease in average price was the result ofthe geographic and community mix of our deliveries.

Current wording

● Sale of homes revenues increased to $769.1 million for thethree months ended July 31, 2025 from $687.4 million for thethree months ended July 31, 2024, andincreased to$2.1 billionfor the nine months ended July 31, 2025 from $1.9 billion for thenine months ended July 31, 2024. There was a 14.0% and 10.2%increase in the number of home deliveries for thethree and nine months ended July 31, 2025, compared to the same periods of the prior year, partially offset by a decrease in average price of 1.9% and 3.8% for thethree and nine months ended July 31, 2025, compared to the same periods of the prior year. The increase in deliveries was primarily the result of an increase in our backlog conversion ratio, while the decrease in average price was the result ofthe geographic and community mix of our deliveries.

Previous wording

● Gross margin dollars decreased 32.9% and 21.2% for thethree and six months ended April 30, 2025, as compared to the same periods of the prior year, while gross margin percentage decreased to 13.8% and 14.5% forthe three and six months ended April 30, 2025, respectively, from 19.5%and 18.9%for the three and six months ended April 30, 2024, respectively. Gross margin percentage, before cost of sales interest expense and land charges, decreased to 17.3%for thethree months ended April 30, 2025 from 22.6% for thethree months ended April 30, 2024, and decreased to 17.8% for the six months ended April 30, 2025 from 22.3% for the six months ended April 30, 2024. The decrease in gross margin percentagewas primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable. In the current homebuilding environment, we remain focused on driving financial performance by increasing our sales pace versus achieving a higher gross margin.

Current wording

● Gross margin dollars decreased 31.3% and 24.8% for thethree and nine months ended July 31, 2025, as compared to the same periods of the prior year, while gross margin percentage decreased to 11.7% and 13.5% forthe three and nine months ended July 31, 2025, respectively, from 19.1%and 18.9%for the three and nine months ended July 31, 2024, respectively. Gross margin percentage, before cost of sales interest expense and land charges, decreased to 17.3%for thethree months ended July 31, 2025 from 22.1% for thethree months ended July 31, 2024, and decreased to 17.6% for the nine months ended July 31, 2025 from 22.2% for the nine months ended July 31, 2024. The decrease in gross margin percentagewas primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable. In the current homebuilding environment, we remain focused on driving financial performance by increasing our sales pace versus achieving a higher gross margin.

Previous wording

● Income before income taxes decreased to $26.5 million for the three months ended April 30, 2025 from $69.4 million for the three months ended April 30, 2024, and decreased to $66.4 million for the six months ended April 30, 2025 from $102.0 million for the six months ended April 30, 2024. Net income decreased to $19.7 million for the three months ended April 30, 2025 from $50.8 million for the three months ended April 30, 2024, and decreased to $47.9 million for the six months ended April 30, 2025 from $74.7 million for the six months ended April 30, 2024. Included in net income for the six months ended April 30, 2025 was a gain of $22.7 million related to the contribution of assets to a new joint venture. Earnings per share, basic and diluted, decreased to $2.64 and $2.43, respectively, for the three months ended April 30, 2025 compared to $7.12 and $6.66, respectively, for the three months ended April 30, 2024. Earnings per share, basic and diluted, decreased to $6.53 and $6.02, respectively, for the six months ended April 30, 2025 compared to $10.22 and $9.57, respectively, for the six months ended April 30, 2024.

Current wording

● Income before income taxes decreased to $23.8 million for the three months ended July 31, 2025 from $97.3 million for the three months ended July 31, 2024, and decreased to $90.2 million for the nine months ended July 31, 2025 from $199.2 million for the nine months ended July 31, 2024. Net income decreased to $16.6 million for the three months ended July 31, 2025 from $72.9 million for the three months ended July 31, 2024, and decreased to $64.5 million for the nine months ended July 31, 2025 from $147.7 million for the nine months ended July 31, 2024. Included in income before income taxes for the nine months ended July 31, 2025 was a gain of $22.7 million related to the contribution of assets to a new joint venture. For the nine months ended July 31, 2024, income before taxes included a gain of $45.7 million related to the consolidation of a joint venture. Earnings per share, basic and diluted, decreased to $2.14 and $1.99, respectively, for the three months ended July 31, 2025 compared to $10.61 and $9.75, respectively, for the three months ended July 31, 2024. Earnings per share, basic and diluted, decreased to $8.55 and $7.94, respectively, for the nine months ended July 31, 2025 compared to $20.85 and $19.15, respectively, for the nine months ended July 31, 2024.

Previous wording

● Net contracts decreased 7.5%and 1.4% for the three and six months ended April 30, 2025 compared to the same periods of the prior year. The decrease is primarily driven by the macroeconomic uncertainty that permeated throughout the period leading to low consumer confidence.

Current wording

● Net contracts increased 1.6% for the three months ended July 31, 2025 and decreased 0.4% for the nine months ended July 31, 2025, compared to the same periods of the prior year. The increase for the three months ended is primarily due to our current strategy of using increased incentives to drive sale pace. During the third quarter of fiscal 2025, incentives were 11.6% of the average sales price, which is up 3.9% from the same period of the prior year and up 1.1% from the second quarter of fiscal 2025. The slight decrease in net contracts for the nine months ended July 31, 2025 is due tocontinued macroeconomic uncertainty that permeated throughout the period leading to low consumer confidence.

Previous wording

● Contract backlog decreased from 2,018 homes at April 30, 2024 to 1,711 homes at April 30, 2025, and the dollar value of contract backlog decreased to $988.2 million, a 12.5% decrease in dollar value compared to the prior year, as our backlog conversion ratio has increased from the prior year period due to our focus on having more QMI homes available to sell and deliver.

Current wording

● Contract backlog decreased from 2,041 homes at July 31, 2024 to 1,491 homes at July 31, 2025, and the dollar value of contract backlog decreased to $838.8 million, a 27.6% decrease in dollar value compared to the prior year, as our backlog conversion ratio has increased from the prior year period due to our having more QMI homes available to sell and deliver.

Previous wording

For the three months ended April 30, 2025, sale of homes revenues decreased 5.3% compared to the same period in the prior year. The sale of homes revenue decreased due to a 5.5% decrease in the average price per home for the three months ended April 30, 2025 as compared to the three months ended April 30, 2024. The average price per home decreased to $506,081 in thethree months ended April 30, 2025 from $535,408 in thethree months ended April 30, 2024. For the six months ended April 30, 2025, sale of homes revenue increased 2.9% compared to the same period in the prior year. The sale of homes revenue increased due to an 8.2% increase in homes delivered, partially offset by a 4.9% decrease in average price per home for the six months ended April 30, 2025 compared to the same period in the prior year. The average price per home decreased to $510,921 in the six months ended April 30, 2025 from $537,325 in the six months ended April 30, 2024. The increase in deliveries was primarily the result of an increase in community count. The decrease in average price was the result of the geographic and community mix of our deliveries. For further detail on changes in segment revenues see “Homebuilding: Operations by Segment” below. For further detail on land sales and other revenues, see “Homebuilding: Land Sales and Other Revenues” below.

Current wording

For thethree and nine months ended July 31, 2025, sale of homes revenues increased 11.9%and 6.1%, respectively, compared to the same periods in the prior year. Thesale of homes revenue increased due to a 14.0% and 10.2% increase in homes delivered, respectively, partially offset by a 1.9% and 3.8% decrease in the average price per home for the three and nine months ended July 31, 2025, respectively, compared with the prior year periods. The average price per home decreased to $537,421 in thethree months ended July 31, 2025 from $547,748 in thethree months ended July 31, 2024. The average price per home decreased to $520,473 in the nine months ended July 31, 2025 from $540,958 in the nine months ended July 31, 2024. The increase in deliveries was primarily the result of an increase in our backlog conversion ratio. The decrease in average price was the result of the geographic and community mix of our deliveries. For further detail on changes in segment revenues see “Homebuilding: Operations by Segment” below. For further detail on land sales and other revenues, see “Homebuilding: Land Sales and Other Revenues” below.

Previous wording

Land sales and other revenues increased $10.6 and $15.0 million for thethree and six months ended April 30, 2025, compared to the same periods in the prior year. Revenue associated with land sales can vary significantly due to the mix of land parcels sold. There weretwo and three land sales during thethree and six months ended April 30, 2025, respectively, and zero andone land sale in the three and six months ended April 30, 2024, respectively. Land sales revenues increased $12.4 millionand $17.9 million during thethree and six months ended April 30, 2025 compared to the same periods in the prior year. Other revenues, which includes interest income, decreased due to lower rates on our cash and cash equivalent accounts during the first half of fiscal 2025, partially offsetting the increase in land sales revenues.

Current wording

Land sales and other revenues decreased $13.4 for the three months ended July 31, 2025 and increased $1.6 million for the nine months ended July 31, 2025, compared to the same periods in the prior year. Revenue associated with land sales can vary significantly due to the mix of land parcels sold. There weretwo and five land sales during thethree and nine months ended July 31, 2025, respectively, and one and two land sales in the three and nine months ended July 31, 2024, respectively. Land sales revenues decreased $13.0 millionand increased $4.8 million during thethree and nine months ended July 31, 2025, respectively, compared to the same periods in the prior year. Other revenues, which includes interest income, decreased due to lower rates on our cash and cash equivalent accounts during the first three quarters of fiscal 2025, partially offsetting the increase in land sales revenues for the nine months ended July 31, 2025.

Previous wording

We sell a variety of home types in various communities, each yielding a different gross margin. As a result, depending on the mix of communities delivering homes, consolidated gross margin may fluctuate up or down. Total homebuilding gross margin percentage decreased to 13.8%and 14.5% for thethree and six months ended April 30, 2025, compared to 19.5%and 18.9% for the prior year periods. Total homebuilding gross margin percentage, before cost of sales interest expense and land charges decreased to 17.3% and 17.8% for the three and six months ended April 30, 2025, compared to 22.6% and 22.3% for the three and six months ended April 30, 2024. The decrease in gross margin percentage for thethree and six months ended April 30, 2025 was primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable.

Current wording

We sell a variety of home types in various communities, each yielding a different gross margin. As a result, depending on the mix of communities delivering homes, consolidated gross margin may fluctuate up or down. Total homebuilding gross margin percentage decreased to 11.7%and 13.5% for thethree and nine months ended July 31, 2025, compared to 19.1%and 18.9% for the prior year periods. Total homebuilding gross margin percentage, before cost of sales interest expense and land charges decreased to 17.3% and 17.6% for the three and nine months ended July 31, 2025, compared to 22.1% and 22.2% for the three and nine months ended July 31, 2024. The decrease in gross margin percentage for thethree and nine months ended July 31, 2025 was primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable.

Previous wording

Inventory impairments and land option write-offs reflects certain inventories we have either written off or written down to their estimated fair value totaling $3.1 million and $0.2 million in expense for thethree months ended April 30, 2025 and 2024, respectively, and $4.1 million and $0.5 million during the six months ended April 30, 2025 and 2024, respectively. Inventory impairments amounted to $1.2 million during the three and six months ended April 30, 2025. There were no inventory impairments during the three and six months ended April 30, 2024. The impairment recorded for fiscal 2025 was for one community in the Northeast segment. We wrote-off residential land option, approval and engineering costs across each of our segments during the first half of fiscal 2025 and 2024.

Current wording

Inventory impairments and land option write-offs reflects certain inventories we have either written off or written down to their estimated fair value totaling $16.0 million and $3.1 million in expense for thethree months ended July 31, 2025 and 2024, respectively, and $20.1 million and $3.6 million during the nine months ended July 31, 2025 and 2024, respectively. Inventory impairments amounted to $7.6 million and $8.8 million during thethree and nine months ended July 31, 2025, respectively, and$2.7 million during both thethree 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.

Previous wording

Homebuilding selling, general and administrative (“SGA”) expenses increased $4.6 million to $51.1 million for thethree months ended April 30, 2025 andincreased $9.9 million to $105.3 million for the six months ended April 30, 2025 compared to the same periods in the prior year. The increase for thethree and six months ended April 30, 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.

Current wording

Homebuilding selling, general and administrative (“SGA”) expenses increased $4.8 million to $55.8 million for thethree months ended July 31, 2025 andincreased $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 thethree 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.

Previous wording

Net contracts per active selling community for thethree and six months ended April 30, 2025 were 11.2 and 20.8, respectively, compared to 13.9 and 24.2 for the same periods in the prior year, respectively. Our reported level of sales contracts (net of cancellations) was impacted by uneven demand caused by overall market uncertainty along with affordability constraints.

Current wording

Net contracts per active selling community for thethree 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.

Previous wording

Most cancellations occur within the legal rescission period, which varies by state but is generally less thantwo weeks after the signing of the contract. Cancellations also occur as a result of a buyer’s failure to qualify for a mortgage, which generally occurs during the first few weeks after signing. Due to our solid backlog position, our cancellation rate as a percentage of beginning backlog for the second quarter of fiscal 2025 was 15%, which approximates our historical normal rate. When sales pace is increasing, the cancellation rate as a percentage of beginning backlog tends to lag the changes seen in our cancellation rate as a percentage of gross sales. Market conditions still remain uncertain and it is difficult to predict what cancellation rates will be in the future.

Current wording

Most cancellations occur within the legal rescission period, which varies by state but is generally less thantwo weeks after the signing of the contract. Cancellations also occur as a result of a buyer’s failure to qualify for a mortgage, which generally occurs during the first few weeks after signing. Due to our solid backlog position, our cancellation rate as a percentage of beginning backlog for the third quarter of fiscal 2025 was 17%, which approximates our historical normal rate. When sales pace is increasing, the cancellation rate as a percentage of beginning backlog tends to lag the changes seen in our cancellation rate as a percentage of gross sales. Market conditions still remain uncertain and it is difficult to predict what cancellation rates will be in the future.

Previous wording

Contract backlog dollars decreased 12.5% as of April 30, 2025 compared to April 30, 2024, and the number of homes in backlog decreased 15.2%for the same period. The decrease in contract backlog dollars and number of homes as of April 30, 2025 compared to April 30, 2024, was primarily driven by an increase in sales of QMI homes and improved contract backlog conversion.

Current wording

Contract backlog dollars decreased 27.6% as of July 31, 2025 compared to July 31, 2024, and the number of homes in backlog decreased 26.9%for the same period. The decrease in contract backlog dollars and number of homes as of July 31, 2025 compared to July 31, 2024, was primarily driven by an increase in sales of QMI homes and improved contract backlog conversion.

Previous wording

Northeast - Homebuilding revenue increased 29.2% for thethree months ended April 30, 2025 compared to the same period in the prior year. The increase for thethree months ended April 30, 2025 was attributed to a 36.0% increase in homes delivered, partially offset by a 4.6% decrease in average sales price. The decrease in average sales price was theresult of new communities delivering lower priced, smaller single family homes andtownhomes in lower-endsubmarkets of the segment for thethree months ended April 30, 2025 compared to some communities delivering higher priced, larger single family homes andtownhomes in higher-endsubmarkets of the segment for thethree months ended April 30, 2024, which were no longer delivering in the second quarter of the current year.

Current wording

Northeast - Homebuilding revenue increased 13.3% for thethree months ended July 31, 2025 compared to the same period in the prior year. The increase for thethree months ended July 31, 2025 was attributed to a 18.6% increase in homes delivered, partially offset by a 4.7% decrease in average sales price. The decrease in average sales price was theresult of new communities delivering lower priced, smaller single family homes andtownhomes in lower-endsubmarkets of the segment for thethree months ended July 31, 2025 compared to some communities delivering higher priced, larger single family homes andtownhomes in higher-endsubmarkets of the segment for thethree months ended July 31, 2024, which were no longer delivering in the second quarter of the current year.

Previous wording

Income before income taxes increased $3.6 million to $71.2 million for the six months ended April 30, 2025 as compared to the same period in the prior year. This was primarily due to the increase in homebuilding revenues discussed above, while gross margin percentage was relatively flat.

Current wording

Income before income taxes increased $5.0 million to $112.7 million for the nine months ended July 31, 2025 as compared to the same period in the prior year. This was primarily due to the increase in homebuilding revenues discussed above, while gross margin percentage was relatively flat.

Previous wording

Southeast – Homebuilding revenue decreased 42.0% for thethree months ended April 30, 2025 compared to the same period in the prior year. The decrease for thethree months ended April 30, 2025 was attributed to a 37.8% decrease in homes delivered and a 6.6% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for thethree months ended April 30, 2025 compared to some communities delivering higher priced, larger single family homes and townhomes in mid to higher-endsubmarkets of the segment for thethree months ended April 30, 2024, which were no longer delivering in the current year.

Current wording

Southeast – Homebuilding revenue decreased 9.7% for thethree months ended July 31, 2025 compared to the same period in the prior year. The decrease for thethree months ended July 31, 2025 was attributed to a 15.6% decrease in homes delivered, partially offset by a 6.9% increase in average sales price. The increase in average sales price was the result of new communities delivering higher priced, larger single family homes and townhomes in higher-end submarkets of the segment for the three months ended July 31, 2025 compared to some communities delivering lower priced, smaller single family homes, townhomes and build-for-rent homes in lower-end submarkets of the segment for the three months ended July 31, 2024, which were no longer delivering in the current year.

Previous wording

Income before income taxes decreased $26.7 million to $0.4 million for thethree months ended April 30, 2025 compared to the same period in the prior year. This was primarily due to the decrease in homebuilding revenue discussed above and a significant decrease in gross margin percentage. For a discussion of gross margin see“Homebuilding: Cost of Sales” above.

Current wording

Income before income taxes decreased $8.8 million to $11.6 million for thethree months ended July 31, 2025 compared to the same period in the prior year. This was primarily due to the decrease in homebuilding revenue discussed above and a significant decrease in gross margin percentage. For a discussion of gross margin see“Homebuilding: Cost of Sales” above.

Previous wording

Homebuilding revenue decreased 46.2% for the six months ended April 30, 2025 compared to the same period in the prior year. The decrease was due to a 37.2% decrease in homes delivered and a 14.2% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for thesix months ended April 30, 2025 compared to some communities delivering higher priced, larger single family homes and townhomes in mid to higher-end submarkets of the segment for the six months ended April 30, 2024, which were no longer delivering in the current year.

Current wording

Homebuilding revenue decreased 34.1% for the nine months ended July 31, 2025 compared to the same period in the prior year. The decrease was due to a 29.8% decrease in homes delivered and a 6.2% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for thenine months ended July 31, 2025 compared to some communities delivering higher priced, larger single family homes and townhomes in mid to higher-end submarkets of the segment for the nine months ended July 31, 2024, which were no longer delivering in the current year.

Previous wording

Income before income taxes decreased$31.8 million to $10.1 million for the six months ended April 30, 2025 compared to the same period in the prior year. This was primarily due to the decrease in homebuilding revenue discussed aboveand a significant decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.

Current wording

Income before income taxes decreased$40.6 million to $21.8 million for the nine months ended July 31, 2025 compared to the same period in the prior year. This was primarily due to the decrease in homebuilding revenue discussed aboveand a significant decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.

Previous wording

West – Homebuilding revenue decreased 8.0% for thethree months ended April 30, 2025 compared to the same period in the prior year. The decrease was due to a 3.4% decrease in homes delivered and an 8.4% decrease in average sales price, partially offset by a $12.7 million increase in land sales and other revenue. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for thethree months ended April 30, 2025 compared to some communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for thethree months ended April 30, 2024, which were no longer delivering in the current year.

Current wording

West – Homebuilding revenue increased 14.0% for thethree months ended July 31, 2025 compared to the same period in the prior year. The increase was due to a 22.1% increase in homes delivered, partially offset by a 2.7% decrease in average sales price and a $13.5 million decrease in land sales and other revenue. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for thethree months ended July 31, 2025 compared to some communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for thethree months ended July 31, 2024, which were no longer delivering in the current year.

Previous wording

Homebuilding revenue increased 2.0% for the six months ended April 30, 2025 compared to the same period in the prior year. The increase was due to an $18.4 million increase in land sales and other revenue and a 10.1% increase in homes delivered, partially offset by a 10.0% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for the six months ended April 30, 2025 compared to some communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for the six months ended April 30, 2024, which were no longer delivering in the current year.

Current wording

Homebuilding revenue increased 6.1% for the nine months ended July 31, 2025 compared to the same period in the prior year. The increase was due to a $4.9 million increase in land sales and other revenue and a 14.1% increase in homes delivered, partially offset by a 7.4% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for the nine months ended July 31, 2025 compared to some communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for the nine months ended July 31, 2024, which were no longer delivering in the current year.

Previous wording

Income before income taxes decreased $34.6 million to $21.6 million for the six months ended April 30, 2025 compared to the same period in the prior year. This is primarily due to a $6.9 million increase in SGA and a decrease in gross margin percentage.

Current wording

Income before income taxes decreased $61.9 million to $15.3 million for the nine months ended July 31, 2025 compared to the same period in the prior year. This is primarily due to a $9.3 million increase in SGA, a $9.5 million increase in inventory impairments and land option write-offs and a significant decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.

Previous wording

Financial services consists primarily of originating mortgages from our home buyers, selling such mortgages in the secondary market, and title insurance activities. We use mandatory investor commitments and forward sales of mortgage-backed securities (“MBS”) to hedge our mortgage-related interest rate exposure on agency and government loans. For thesix months ended April 30, 2025 and 2024, Federal Housing Administration and Veterans Administration (“FHA/VA”) loans represented 40.6% and 34.2%, respectively, of our total loans. For thesix months ended April 30, 2025 compared to the same period in the prior year, our conforming conventional loan originations as a percentage of our total loans decreased from 65.5% to 58.5%. The origination of loans which exceed conforming conventions increased from 0.3% to 0.9% for thesix months ended April 30, 2025 compared to the same period in the prior year.

Current wording

Financial services consists primarily of originating mortgages from our home buyers, selling such mortgages in the secondary market, and title insurance activities. We use mandatory investor commitments and forward sales of mortgage-backed securities (“MBS”) to hedge our mortgage-related interest rate exposure on agency and government loans. For thenine months ended July 31, 2025 and 2024, Federal Housing Administration and Veterans Administration (“FHA/VA”) loans represented 41.0% and 34.1%, respectively, of our total loans. For thenine months ended July 31, 2025 compared to the same period in the prior year, our conforming conventional loan originations as a percentage of our total loans decreased from 65.3% to 58.0%. The origination of loans which exceed conforming conventions increased from 0.6% to 1.0% for thenine months ended July 31, 2025 compared to the same period in the prior year.

Previous wording

During thethree and six months ended April 30, 2025 and 2024, financial services provided $8.4 million and $11.9 million of income before income taxes compared to $5.1 million and $8.9 million for the same periods in the prior year. The increase in financial services income before income taxes for thethree and six months ended April 30, 2025 compared to the same periods in the prior year was primarily due to an increase in the amount of loans closed during the period and an increase in the basis point spread between the loans originated and the implied rate from our sale of the loans. In the markets served by our wholly owned mortgage banking subsidiaries,78.1% and 78.6% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the three months ended April 30, 2025 and 2024, respectively, and 79.2% and 78.7% ofour non-cash homebuyers obtained mortgages originated by these subsidiaries during the six months ended April 30, 2025 and 2024, respectively.

Current wording

During thethree and nine months ended July 31, 2025 and 2024, financial services provided $13.9 million and $25.8 million of income before income taxes compared to $6.5 million and $15.5 million for the same periods in the prior year. The increase in financial services income before income taxes for thethree and nine months ended July 31, 2025 compared to the same periods in the prior year was primarily due to an increase in the amount of loans closed during the period and an increase in the basis point spread between the loans originated and the implied rate from our sale of the loans. In the markets served by our wholly owned mortgage banking subsidiaries,80.9% and 81.4% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the three months ended July 31, 2025 and 2024, respectively, and 79.9% and 79.7% ofour non-cash homebuyers obtained mortgages originated by these subsidiaries during the nine months ended July 31, 2025 and 2024, respectively.

Previous wording

Corporate general and administrative expenses include operations at our headquarters in New Jersey. These expenses include payroll, stock compensation, facility costs and rent and other costs associated with our executive offices, legal expenses, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, national and digital marketing, construction services and administration of insurance, quality and safety. Corporate general and administrative expenses decreased to $29.5 million for thethree months ended April 30, 2025 compared to $32.5 million for thethree months ended April 30, 2024 and decreased to $62.2 million for the six months ended April 30, 2025 compared to $69.7 million for the six months ended April 30, 2024. The decrease was primarily due to lower stock compensation expense compared to the same periods in the prior year. During the first half of fiscal 2024, we had additional expense related to finalizing the value of phantom stock awards granted under our 2019 long-term incentive plan as a result of an increase to our stock price. In addition, for the first half of fiscal 2025, we recorded a benefit related to our 2024 and 2023 long-term incentive plan phantom stock awards, as a result of a decrease in our stock price during the period.

Current wording

Corporate general and administrative expenses include operations at our headquarters in New Jersey. These expenses include payroll, stock compensation, facility costs and rent and other costs associated with our executive offices, legal expenses, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, national and digital marketing, construction services and administration of insurance, quality and safety. Corporate general and administrative expenses decreased to $35.0 million for thethree months ended July 31, 2025 compared to $38.5 million for thethree months ended July 31, 2024 and decreased to $97.2 million for the nine months ended July 31, 2025 compared to $108.1 million for the nine months ended July 31, 2024. The decrease was primarily due to lower stock compensation expense compared to the same periods in the prior year. During the nine months of fiscal 2024, we had additional expense related to finalizing the value of phantom stock awards granted under our 2019 long-term incentive plan as a result of an increase to our stock price. In addition, for the nine months of fiscal 2025, we recorded a benefit related to our 2024 and 2023 long-term incentive plan phantom stock awards, as a result of a decrease in our stock price during the period.

Previous wording

Income from unconsolidated joint ventures consists of our share of the earnings or losses of our unconsolidated joint ventures. Income from unconsolidated joint ventures decreased $2.1 millionto $9.0 million for thethree months ended April 30, 2025 and decreased $7.9 million to $18.2 million for the six months ended April 30, 2025 compared to the same periods in the prior year. The decrease for the three andsix months ended April 30, 2025 compared to the same period of the prior year was primarily due to the recognition of losses from two unconsolidated joint ventures in which one just started delivering homes in the second quarter of fiscal 2025 and the other is not currently delivering any homes. In addition, we recognized income in the first half of the prior year from a joint venture that was subsequently consolidated in fiscal 2024.

Current wording

Income from unconsolidated joint ventures consists of our share of the earnings or losses of our unconsolidated joint ventures. Income from unconsolidated joint ventures increased $4.8 millionto $15.5 million for thethree months ended July 31, 2025 and decreased $3.1 million to $33.8 million for the nine months ended July 31, 2025 compared to the same periods in the prior year. The increase for the three months ended July 31, 2025 compared to the same period of the prior year was primarily due to the recognition of additional income from two unconsolidated joint ventures; because the joint venture partner achieved certain return hurdles, the Company was able to recognize a higher share of the unconsolidated joint ventures' income than it had in the prior year. The decrease for thenine months ended July 31, 2025 compared to the same period of the prior year was primarily due to the recognition of losses from two unconsolidated joint ventures in which one just started delivering homes in the second quarter of fiscal 2025 and the other is not currently delivering any homes. In addition, we recognized income in the first nine months of the prior year from a joint venture that was subsequently consolidated in fiscal 2024.

Previous wording

For thethree and six months ended April 30, 2025 and 2024, we recorded income tax expense of $6.8 million and $18.5 million, respectively, and $18.6 million and $27.2 million, respectively. In both the current and prior year periods, the expense was primarily driven by federal and state tax expense on income before income taxes and permanent differences, partially offset by the generation of energy home credits. The federal tax expense is not paid in cash as it is offset by the use of our existing NOL carryforwards.

Current wording

For thethree and nine months ended July 31, 2025, we recorded income tax expense of $7.2 million and $25.7 million, respectively, and $24.4 million and $51.6 million for the same periods in the prior year, respectively. In both the current and prior year periods, the expense was primarily driven by federal and state tax expense on income before income taxes and permanent differences, partially offset by the generation of energy home credits. The federal tax expense is not paid in cash as it is offset by the use of our existing NOL carryforwards.

Previous wording

Our total liquidity at April 30, 2025 was $202.4 million, including $74.0 million in homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility. We believe that our cash on hand together with available borrowings on our senior secured revolving credit facility will be sufficient for at least the next 12 months to finance our working capital requirements.

Current wording

Our total liquidity at July 31, 2025 was $277.9 million, including $146.6 million in homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility. We believe that our cash on hand together with available borrowings on our senior secured revolving credit facility will be sufficient for at least the next 12 months to finance our working capital requirements.

Previous wording

We spent $467.4 million on land and land development during the first half of fiscal 2025. After land and land development spending and all other operating activities, including revenue received from deliveries, cash used in operations was $33.6 million. During the first half of fiscal 2025, cash used in investing activities was $32.9 million, primarily due to a new joint venture entered into during the first quarter of fiscal 2025, along with spending on capitalized software, partially offset by distributions of capital from existing unconsolidated joint ventures. Cash used in financing activities was $81.0 million during the first half of fiscal 2025, primarily due to the redemption of our 13.5% Senior Notes, along with net payments for our mortgage warehouse lines of credit, net payments fornonrecourse mortgage financings, treasury stock purchases and payments of preferred dividends, partially offset bynet proceeds for land banking financings and model sale leaseback financings. We intend to continue to use nonrecourse mortgages, model sale leasebacks, joint ventures, and, subject to covenant restrictions in our debt instruments, land banking programs as our business needs dictate.

Current wording

We spent $660.0 million on land and land development during the first three quarters of fiscal 2025. After land and land development spending and all other operating activities, including revenue received from deliveries, cash from operations was $19.2 million. During the first three quarters of fiscal 2025, cash used in investing activities was $60.6 million, primarily due to new joint ventures entered into during fiscal 2025, along with spending on capitalized software, partially offset by distributions of capital from existing unconsolidated joint ventures. Cash used in financing activities was $30.5 million during the first three quarters of fiscal 2025, primarily due to the redemption of our 13.5% Senior Notes, along with net payments for our mortgage warehouse lines of credit, net payments fornonrecourse mortgage financings, treasury stock purchases and payments of preferred dividends, partially offset bynet proceeds for land banking financings and model sale leaseback financings. We intend to continue to use nonrecourse mortgages, model sale leasebacks, joint ventures, and, subject to covenant restrictions in our debt instruments, land banking programs as our business needs dictate.

Previous wording

Our cash uses during thesix months ended April 30, 2025 and 2024 were for operating expenses, land purchases, land deposits, land development, construction spending, investments in unconsolidated joint ventures, land banking transactions, state income taxes, debt reductions, interest payments, preferred dividends, treasury stock purchases and litigation matters. During these periods, we provided for our cash requirements from available cash on hand, housing and land sales, nonrecourse mortgage transactions, income from unconsolidated joint ventures, financial service revenues and other revenues.

Current wording

Our cash uses during thenine months ended July 31, 2025 and 2024 were for operating expenses, land purchases, land deposits, land development, construction spending, investments in unconsolidated joint ventures, land banking transactions, state income taxes, debt reductions, interest payments, preferred dividends, treasury stock purchases and litigation matters. During these periods, we provided for our cash requirements from available cash on hand, housing and land sales, nonrecourse mortgage transactions, income from unconsolidated joint ventures, financial service revenues and other revenues.

Previous wording

(1)AtApril 30, 2025, provides for up to $125.0 million in aggregate amount of senior securedfirst lien revolving loans.The revolving loans thereunder have a maturity of June 30, 2026 and borrowings bear interest, at K. Hovnanian’s option, at either (i) a term secured overnight financing rate (subject to a floor of 3.00%) plus an applicable margin of 4.50% or (ii) an alternate base rate (subject to a floor of 4.00%) plus an applicable margin of 3.50%. In addition, K. Hovnanian will pay an unused commitment fee on the undrawn revolving commitments at a rate of 1.00% per annum.**

Current wording

(1)At July 31, 2025, provides for up to $125.0 million in aggregate amount of senior securedfirst lien revolving loans.The revolving loans thereunder have a maturity of June 30, 2026 and borrowings bear interest, at K. Hovnanian’s option, at either (i) a term secured overnight financing rate (subject to a floor of 3.00%) plus an applicable margin of 4.50% or (ii) an alternate base rate (subject to a floor of 4.00%) plus an applicable margin of 3.50%. In addition, K. Hovnanian will pay an unused commitment fee on the undrawn revolving commitments at a rate of 1.00% per annum.**

Previous wording

The credit agreements governing the Credit Facilities and the indentures governing the senior secured and senior notes (together with the Credit Facilities, the “Debt Instruments”) outstanding at April 30, 2025 do not contain any financial maintenance covenants, but do contain restrictive covenants that limit, among other things, the ability of HEI and certain of its subsidiaries, including K. Hovnanian, to incur (including through exchange or certain other types of transactions) indebtedness, pay dividends and make distributions on common and preferred stock, repay/repurchase certain indebtedness prior to its respective stated maturity, repurchase common and preferred stock, make other restricted payments (including investments), sell certain assets (including in certain land banking transactions), incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets and enter into certain transactions with affiliates. The Debt Instruments also contain customary events of default which would permit the lenders or holders thereof to exercise remedies with respect to the collateral (as applicable), declare the loans (the "Secured Term Loans") made under the Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028, and loans (the "Secured Revolving Loans") made under the Senior Secured Revolving Credit Agreement due June 30, 2026, or notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Secured Term Loans, Secured Revolving Loans or notes or other material indebtedness, cross default to other material indebtedness, the failure to comply with agreements and covenants and specified events of bankruptcy and insolvency, with respect to the Secured Term Loans and Secured Revolving Loans, material inaccuracy of representations and warranties and with respect to the Secured Term Loans and Secured Revolving Loans, a change of control, and, with respect to the Secured Term Loans, Secured Revolving Loans and senior secured notes, the failure of the documents granting security for the obligations under the secured Debt Instruments to be in full force and effect, and the failure of the liens on any material portion of the collateral securing the obligations under the secured Debt Instruments to be valid and perfected. As of April 30, 2025, we believe we were in compliance with the covenants of the Debt Instruments.

Current wording

The credit agreements governing the Credit Facilities and the indentures governing the senior secured and senior notes (together, the “Debt Instruments”) outstanding at July 31, 2025 do not contain any financial maintenance covenants, but do contain restrictive covenants that limit, among other things, the ability of HEI and certain of its subsidiaries, including K. Hovnanian, to incur (including through exchange or certain other types of transactions) indebtedness, pay dividends and make distributions on common and preferred stock, repay/repurchase certain indebtedness prior to its respective stated maturity, repurchase common and preferred stock, make other restricted payments (including investments), sell certain assets (including in certain land banking transactions), incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets and enter into certain transactions with affiliates. The Debt Instruments also contain customary events of default which would permit the lenders or holders thereof to exercise remedies with respect to the collateral (as applicable), declare the loans (the "Secured Term Loans") made under the Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028, and loans (the "Secured Revolving Loans") made under the Senior Secured Revolving Credit Agreement due June 30, 2026, or notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Secured Term Loans, Secured Revolving Loans or notes or other material indebtedness, cross default to other material indebtedness, the failure to comply with agreements and covenants and specified events of bankruptcy and insolvency, with respect to the Secured Term Loans and Secured Revolving Loans, material inaccuracy of representations and warranties and with respect to the Secured Term Loans and Secured Revolving Loans, a change of control, and, with respect to the Secured Term Loans, Secured Revolving Loans and senior secured notes, the failure of the documents granting security for the obligations under the secured Debt Instruments to be in full force and effect, and the failure of the liens on any material portion of the collateral securing the obligations under the secured Debt Instruments to be valid and perfected. As of July 31, 2025, we believe we were in compliance with the covenants of the Debt Instruments.

Previous wording

Under the terms of our Debt Instruments, we have the right to make certain redemptions and prepayments and, depending on market conditions, our strategic priorities and covenant restrictions, may do so from time to time. We also continue to actively analyze and evaluate our capital structure and explore transactions to simplify our capital structure and to strengthen our balance sheet, including those that reduce leverage, interest rates and/or extend maturities, and will seek to do so with the right opportunity. We may also continue to make debt or equity purchases and/or exchanges from time to time through tender offers, exchange offers, redemptions, open market purchases, private transactions, or otherwise, or seek to raise additional debt or equity capital, depending on market conditions and covenant restrictions.

Current wording

Under the terms of our Debt Instruments, we have the right to make certain redemptions and prepayments and, depending on market conditions, our strategic priorities and covenant restrictions, may do so from time to time. We also continue to actively analyze and evaluate our capital structure and explore transactions to simplify our capital structure and to strengthen our balance sheet, including those that reduce leverage, interest rates and/or extend maturities, and will seek to do so in the near term with the right opportunity. We may also continue to make debt or equity purchases and/or exchanges from time to time through tender offers, exchange offers, redemptions, open market purchases, private transactions, or otherwise, or seek to raise additional debt or equity capital, depending on market conditions and covenant restrictions.

Previous wording

We had nonrecourse mortgage loans for certain communities totaling $78.1 million and $90.7 million, net of debt issuance costs, at April 30, 2025 and October 31, 2024, respectively, which are secured by the related real property, including any improvements, with an aggregate book value of $196.3 million and $249.7 million, respectively. The weighted-average interest rate on these obligations was 8.2% and 8.7% at April 30, 2025 and October 31, 2024, respectively, and the mortgage loan payments on each community primarily correspond to home deliveries.

Current wording

We had nonrecourse mortgage loans for certain communities totaling $53.5 million and $90.7 million, net of debt issuance costs, at July 31, 2025 and October 31, 2024, respectively, which are secured by the related real property, including any improvements, with an aggregate book value of $123.8 million and $249.7 million, respectively. The weighted-average interest rate on these obligations was 8.1% and 8.7% at July 31, 2025 and October 31, 2024, respectively, and the mortgage loan payments on each community primarily correspond to home deliveries.

Previous wording

Our wholly owned mortgage banking subsidiary, K. Hovnanian Mortgage, originates mortgage loans primarily from the sale of our homes. Such mortgage loans and related servicing rights are sold in the secondary mortgage market within a short period of time. K. Hovnanian Mortgage finances the origination of mortgage loans through various master repurchase agreements, which are recorded in "Financial services" liabilities on the Condensed Consolidated Balance Sheets. The loans are secured by the mortgages held for sale and are repaid when we sell the underlying mortgage loans to permanent investors. As of April 30, 2025 and October 31, 2024, we had an aggregate of $94.6 million and $131.4 million, respectively, outstanding under several of K. Hovnanian Mortgage’s short-term borrowing facilities.

Current wording

Our wholly owned mortgage banking subsidiary, K. Hovnanian Mortgage, originates mortgage loans primarily from the sale of our homes. Such mortgage loans and related servicing rights are sold in the secondary mortgage market within a short period of time. K. Hovnanian Mortgage finances the origination of mortgage loans through various master repurchase agreements, which are recorded in "Financial services" liabilities on the Condensed Consolidated Balance Sheets. The loans are secured by the mortgages held for sale and are repaid when we sell the underlying mortgage loans to permanent investors. As of July 31, 2025 and October 31, 2024, we had an aggregate of $110.0 million and $131.4 million, respectively, outstanding under several of K. Hovnanian Mortgage’s short-term borrowing facilities.

Previous wording

During thesix months ended April 30, 2025, we repurchased 257,908 shares under the stock repurchase program, with a market value of $30.1 million, or $116.70 per share. During thesix months ended April 30, 2024, we repurchased 106,047 shares under the stock repurchase program, with a market value of $15.0 million, or $141.45 per share. As of April 30, 2025,$26.4 million of our Class A common stock was available to be purchased under the stock repurchase program.

Current wording

During thenine months ended July 31, 2025, we repurchased 257,908 shares under the stock repurchase program, with a market value of $30.1 million, or $116.70 per share. During the nine months ended July 31, 2024, we repurchased 188,800 shares under the stock repurchase program, with a market value of $26.5 million, or $140.31 per share. As of July 31, 2025,$26.4 million of our Class A common stock was available to be purchased under the stock repurchase program.