HOVNANIAN ENTERPRISES INC

Previous wording

Hovnanian Enterprises, Inc. (“HEI”) conducts all of its homebuilding and financial services operations through its subsidiaries (references herein to the “Company,” “we,” “us” or “our” refer to HEI and its consolidated subsidiaries and should be understood to reflect the consolidated business of HEI’s subsidiaries).

Current wording

Hovnanian Enterprises, Inc. (“HEI”) conducts all of its homebuilding and financial services operations through its consolidated subsidiaries (references herein to the “Company,” “we,” “us” or “our” refer to HEI and its consolidated subsidiaries and should be understood to reflect the consolidated business of HEI’s subsidiaries).

Previous wording

During fiscal 2025 and continuing through the first half of fiscal 2026, 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.

Current wording

During fiscal 2025 and continuing through the first nine months of fiscal 2026, 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

We continue to use our increased inventory of quick move-in homes ("QMI homes") to help meet buyers’ needs for more affordable housing in the existing uncertain interest rate environment. The time between contract signing and closing is shorter with a QMI home as compared to a to be built home, which provides customers with more certainty on their mortgage pricing. The availability of QMI homes also allows us to offer mortgage interest rate buydown assistance, which is a tool we offer through our wholly-owned mortgage banking subsidiary ("K. Hovnanian Mortgage"), to help ease the impact of higher monthly payments from rising interest rates. We pay the cost of interest rate buydowns for customers that qualify through K. Hovnanian Mortgage and decide to use the program. The level of interest rate based incentives utilized differs across our markets and is one of several available options we use to drive sales and close homes.

Current wording

We continue to use our inventory of quick move-in homes ("QMI homes") to help meet buyers’ needs for more affordable housing in the existing uncertain interest rate environment. The time between contract signing and closing is shorter with a QMI home as compared to a to be built home, which provides customers with more certainty on their mortgage pricing. The availability of QMI homes also allows us to offer mortgage interest rate buydown assistance, which is a tool we offer through our wholly-owned mortgage banking subsidiary ("K. Hovnanian Mortgage"), to help ease the impact of higher monthly payments from rising interest rates. We pay the cost of interest rate buydowns for customers that qualify through K. Hovnanian Mortgage and decide to use the program. The level of interest rate based incentives utilized differs across our markets and is one of several available options we use to drive sales and close homes.

Previous wording

Our emphasis on driving sales pace versus price resulted in domestic net contracts increasing by 1.0% in the second quarter of fiscal 2026 compared to the prior year second quarter and 2.0% for the six months ended April 30, 2026 compared to the same period of the prior year. Within the six-month period, net contracts fluctuated from month to month, reflecting ongoing shifts in market conditions and consumer sentiment, including increased hesitancy from buyers, which we believe was partially attributed to the Iran war. Even with the volatility in the broader economy and affordability constraints, we were able to raise prices or decrease incentives in approximately 44% of our domestic communities during thesecond quarter of fiscal 2026.

Current wording

Our focus remains on driving sales pace rather than price. However, higher mortgage rates and concerns about global instability continued to weigh on the housing market contributing to a 4.6% decrease in domestic net contracts in the third quarter of fiscal 2026 compared with the prior year third quarter and a 0.1% decrease for thenine months ended July 31, 2026 compared with the same period in the prior year. During the nine-month period ended July 31, 2026, net contracts varied by month, reflecting changing market conditions and consumer sentiment, including increased buyer hesitancy that we believe was partially attributable to the Iran war. Despite broader political and economic volatility and continued affordability constraints, we raised prices or reduced incentives in approximately 31% of our domestic communities during thethird quarter of fiscal 2026.

Previous wording

While the long-term fundamentals of the new home market remain favorable, there remains a great degree of uncertainty due to inflation, tariffs, the continued possibility of an economic recession, employment risk, geopolitical events and the potential for further mortgage rate increases. While we continue to experience some supply chain issues, we remain focused on continuing to shorten our construction cycle times and building on our national initiatives to drive down costs with our material providers and trade partners. The changing conditions in the housing market, and in the general economy, makes it difficult to predict how strongly our business will be impacted by these external factors over fiscal 2026 and beyond.

Current wording

Although the long-term fundamentals of the new home market remain favorable, significant uncertainty persists due to inflation, tariffs, the potential for an economic recession, employment risk, geopolitical events and the possibility of further increases in mortgage rates. While some supply chain issues continue, we remain focused on shortening construction cycle times and advancing our national initiatives to reduce costs with our materials providers and trade partners. Given changing conditions in the housing market and the broader economy, it remains difficult to predict the extent to which these external factors will affect our business for the remainder of fiscal 2026 and beyond.

Previous wording

During thesix months ended April 30, 2026, our cash position allowed us to spend $413.0 million on domestic land purchases and land development for long-term growth and repurchase $18.5 million of our common stock and still have total liquidity of $442.0 million, including $310.9 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, 2026.

Current wording

During thenine months ended July 31, 2026, our cash position allowed us to spend $644.9 million on domestic land purchases and land development for long-term growth and repurchase $18.5 million of our common stock and still have total liquidity of $379.8 million, including $249.1 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, 2026.

Previous wording

Information on our operating results for thethree and six months ended April 30, 2026 are as follows:

Current wording

Information on our operating results for thethree and nine months ended July 31, 2026 are as follows:

Previous wording

● Gross margin dollars decreased 31.0% and 36.0% for thethree and six months ended April 30, 2026, respectively, as compared to the same periods of the prior year. Gross margin percentage decreased to 10.2% for both thethree and six months ended April 30, 2026 from 13.8% and 14.5% for the three and six months ended April 30, 2025, respectively. Gross margin percentage, before cost of sales interest expense and land charges, decreased to 14.3% for thethree months ended April 30, 2026 from 17.3% for thethree months ended April 30, 2025 and decreased to 13.9% for thesix months ended April 30, 2026 from 17.8% for thesix months ended April 30, 2025. The decrease in gross margin percentage was 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 11.4% and 28.0% for thethree and nine months ended July 31, 2026, respectively, compared with the same periods in the prior year, primarily due to a reduction in delivery volume. Gross margin percentage was 11.8% and 10.8% for thethree and nine months ended July 31, 2026, respectively, compared with 11.7% and 13.5% for the corresponding periods in 2025, respectively. Gross margin percentage, before cost of sales interest expense and land charges, decreased to 14.6% for thethree months ended July 31, 2026 from 17.3% in the prior year period and to 14.2% for thenine months ended July 31, 2026 from 17.6% in the prior year period. The decreases were primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to improve affordability. In the current homebuilding environment, we remain focused on driving financial performance by increasing sales pace rather than achieving a higher gross margin.

Previous wording

● Selling, general and administrative costs (including corporate general and administrative expenses) ("Total SGA") was $84.0 million, or 12.6% of total revenues, in the three months ended April 30, 2026 compared with $80.6 million, or 11.7% of total revenues, in the three months ended April 30, 2025, and $168.0 million, or 12.9% of total revenues, in the six months ended April 30, 2026 compared with $167.5 million, or 12.3% of total revenues, in the six months ended April 30, 2025. The increase in Total SGA percentage is primarily due to the decrease in sale of homes revenue for the same periods of the prior year.

Current wording

● Selling, general and administrative costs, including corporate general and administrative expenses, ("Total SGA") were $86.9 million, or 12.3% of total revenues, for the three months ended July 31, 2026 compared with $90.8 million, or 11.3% of total revenues, in the prior year period. For the nine months ended July 31, 2026, Total SGA was $254.9 million, or 12.7% of total revenues, compared with $258.3 million, or 12.0% of total revenues, in the prior year period. The increase in Total SGA as a percentage of revenues was primarily due to lower sale of homes revenues compared with the prior year periods.

Previous wording

For the three months ended April 30, 2026, sale of homes revenues decreased 7.1% compared to the same period in the prior year. The sale of homes revenue decreased due to an 11.8% decrease in homes delivered, partially offset by a 5.3% increase in the average price per home for the three months ended April 30, 2026 compared with the prior year period. The average price per home increased to $532,794 in the three months ended April 30, 2026 from $506,081 in the three months ended April 30, 2025. For thesix months ended April 30, 2026, sale of homes revenues decreased 9.0% compared to the same period in the prior year. The sale of homes revenues decreased due to a 12.1% decrease in homes delivered, partially offset by a 3.4% increase in the average price per home for thesix months ended April 30, 2026 compared to the same period in the prior year. The average price per home increased to $528,413 in the six months ended April 30, 2026 from $510,921 in the six months ended April 30, 2025. The increase 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 the three months ended July 31, 2026, sale of homes revenues decreased 11.7% compared with the prior year period. Sale of homes revenue decreased primarily due to a 12.0% decrease in homes delivered, partially offset by a 0.4% increase in average sales price compared with the prior year period. Average price per home increased to $539,350 in the three months ended July 31, 2026 from $537,421 in the three months ended July 31, 2025. For thenine months ended July 31, 2026, sale of homes revenues decreased 10.0% compared with the prior year period. Sale of homes revenues decreased primarily due to a 12.0% decrease in homes delivered, partially offset by a 2.3% increase in average sales price compared with the prior year period. Average price per home increased to $532,357 in the nine months ended July 31, 2026 from $520,473 in the nine months ended July 31, 2025. The increase 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 $25.2 million and $52.6 million for thethree and six months ended April 30, 2026, respectively, 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 were three and four land sales during thethree and six months ended April 30, 2026, respectively, and two and three land sales in the three and six months ended April 30, 2025, respectively. Land sales revenues increased $20.9 million and $48.8 million during thethree and six months ended April 30, 2026, respectively, compared to the same periods in the prior year.

Current wording

Land sales and other revenues increased $0.1 million and $52.7 million for thethree and nine months ended July 31, 2026, respectively, compared with the same periods in the prior year. Revenue associated with land sales can vary significantly due to the mix of land parcels sold. There were zero and four land sales during thethree and nine months ended July 31, 2026, respectively, and two and five land sales in the three and nine months ended July 31, 2025, respectively. Land sales revenues decreased $1.2 million and increased $47.6 million during thethree and nine months ended July 31, 2026, respectively, compared with the same periods in the prior year.

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 10.2% for both thethree and six months ended April 30, 2026, compared to 13.8% and 14.5% for the prior year periods. Total homebuilding gross margin percentage, before cost of sales interest expense and land charges decreased to 14.3% and 13.9% for thethree and six months ended April 30, 2026, respectively, compared to 17.3% and 17.8% for thethree and six months ended April 30, 2025, respectively. The decrease in gross margin percentage for thethree and six months ended April 30, 2026 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 across our communities, each yielding a different gross margin. As a result, depending on the mix of communities delivering homes, consolidated gross margin may fluctuate. Total homebuilding gross margin percentage was 11.8% and 10.8% for thethree and nine months ended July 31, 2026, respectively, compared with 11.7% and 13.5% for the prior year periods. Total homebuilding gross margin percentage, before cost of sales interest expense and land charges decreased to 14.6% and 14.2% for thethree and nine months ended July 31, 2026, respectively, from 17.3% and 17.6% for the corresponding periods in 2025. The slight increase in gross margin percentage for the three months ended July 31, 2026 was primarily due to a modest increase in average price per home. The decrease for the nine months ended July 31, 2026 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 $8.8 million and $3.1 million in expense for thethree months ended April 30, 2026 and 2025, respectively, and $11.1 million and $4.1 million during thesix months ended April 30, 2026 and 2025, respectively. Inventory impairments amounted to $5.3 million during both the three and six months ended April 30, 2026 and $1.2 million during both thethree and six months ended April 30, 2025. The impairments recorded for fiscal 2026 were for two communities in the Southeast segment and two communities in the West segment. 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 both fiscal 2026 and 2025.

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 $0.5 million and $16.0 million in expense for thethree months ended July 31, 2026 and 2025, respectively, and $11.6 million and $20.1 million during thenine months ended July 31, 2026 and 2025, respectively. Inventory impairments amounted to $5.3 million during the nine months ended July 31, 2026 and $7.6 million and $8.8 million during thethree and nine months ended July 31, 2025, respectively. No inventory impairments were recorded during the three months ended July 31, 2026. The impairments recorded for the nine months ended July 31, 2026 related to two communities in the Southeast segment and two communities in the West segment. The impairments recorded for the three and nine months ended July 31, 2025 related to two communities in the Northeast segment and three communities in the West segment. During the first nine months of both fiscal 2026 and 2025, we wrote-off residential land option, approval and engineering costs across each of our segments.

Previous wording

Net domestic contracts per active selling community for thethree and six months ended April 30, 2026 were 11.3 and 21.2, respectively, compared to 11.2 and 20.8 for the same periods in the prior year, respectively. Our reported level of domestic sales contracts (net of cancellations) continues to be driven by customer demand for our available QMI homes. This approach of offering a strong selection of QMI homes allows customers to take advantage of available incentives and purchase homes quickly and affordably.

Current wording

Net domestic contracts per active selling community were 9.4 and 31.0 for the three and nine months ended July 31, 2026, respectively, compared with 9.8 and 30.8 for the same periods in the prior year. Domestic sales contracts, net of cancellations, continued to be largely driven by customer demand for our available QMI homes. Offering a strong selection of QMI homes enables customers to use available incentives and purchase homes more quickly and affordably.

Previous wording

Most cancellations occur within the legal rescission period, which varies by state but is generally less than two 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. Generally, 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 than two weeks after the signing of the contract. Cancellations also occur because of a buyer’s failure to qualify for a mortgage, which generally occurs during the first few weeks after signing. Generally, 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

(1)Excludes eight consolidated homes and $5.0 million of contract backlog related to the assets and liabilities contributed from the West segment to a joint venture we entered into during the three months ended January 31, 2025.

Current wording

(1) Excludes eight consolidated homes and $5.0 million of contract backlog related to the assets and liabilities contributed from the West segment to a joint venture we entered into during the three months ended January 31, 2025.

Previous wording

Northeast - Homebuilding revenue decreased 2.0% for thethree months ended April 30, 2026 compared to the same period in the prior year. The decrease for thethree months ended April 30, 2026 was attributed to a 14.2% decrease in homes delivered and a 1.5% decrease in average sales price, partially offset by a $34.5 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 and townhomes in lower-end submarkets of the segment for thethree months ended April 30, 2026 compared to some communities delivering higher priced, larger single family homes and townhomes in higher-end submarkets of the segment for thethree months ended April 30, 2025, which were no longer delivering in the second quarter of the current year.

Current wording

Northeast - Homebuilding revenue decreased 19.6% for thethree months ended July 31, 2026 compared to the same period in the prior year. The decrease for thethree months ended July 31, 2026 was attributed to an 11.7% decrease in homes delivered and an 8.7% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes and townhomes in lower-end submarkets of the segment for the three months ended July 31, 2026 compared to some 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, which we are no longer delivering in the current year.

Previous wording

Income before income taxes increased $3.5 million to $41.0 million for thethree months ended April 30, 2026 as compared to the same period in the prior year. This was primarily due to the $34.5 million increase in land sales and other revenue, partially offset by a decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.

Current wording

Income before income taxes decreased $16.6 million to $30.7 million for thethree months ended July 31, 2026 as compared to the same period in the prior year. This was primarily due to the decrease in homebuilding revenue discussed above and a $3.6 million decrease in income from unconsolidated joint ventures, while gross margin percentage was relatively flat. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.

Previous wording

Homebuilding revenue decreased 2.7% for the six months ended April 30, 2026 compared to the same period in the prior year. The decrease for the six months ended April 30, 2026 was attributed to a 10.3% decrease in homes delivered and a 5.4% decrease in average sales price, partially offset by a $67.2 million increase in land sales and other revenue. The decrease in the average sales price was the result of new communities delivering lower priced, smaller single family homes, townhomes and affordable-housing homes in lower-end submarkets of the segment for thesix months ended April 30, 2026 compared to some communities delivering higher priced, larger single family homes and townhomes in higher-end submarkets of the segment for thesix months ended April 30, 2025, which we are no longer delivering in the current year.

Current wording

Homebuilding revenue decreased 8.5% for the nine months ended July 31, 2026 compared to the same period in the prior year. The decrease for the nine months ended July 31, 2026 was attributed to a 10.8% decrease in homes delivered and a 6.6% decrease in average sales price, partially offset by a $66.3 million increase in land sales and other revenue. The decrease in the average sales price was the result of new communities delivering lower priced, smaller single family homes, townhomes and affordable-housing homes in lower-end submarkets of the segment for the nine months ended July 31, 2026 compared to some communities delivering higher priced, larger single family homes and townhomes in higher-end submarkets of the segment for the nine months ended July 31, 2025, which we are no longer delivering in the current year.

Previous wording

Income before income taxes increased $19.0 million to $98.8 million for the six months ended April 30, 2026 as compared to the same period in the prior year. This was primarily due to the $67.2 million increase in land sales and other revenue discussed above, partially offset by a decrease in gross margin percentage.

Current wording

Income before income taxes increased $2.4 million to $129.5 million for the nine months ended July 31, 2026 as compared to the same period in the prior year. This was primarily due to the $66.3 million increase in land sales and other revenue discussed above, partially offset by a decrease in gross margin percentage.

Previous wording

Homebuilding revenue increased 16.8% for the six months ended April 30, 2026 compared to the same period in the prior year. The increase was due to a 10.8% increase in homes delivered and a 5.5% increase in average sales price. The increase in average sales price was the result of new communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for the six months ended April 30, 2026 compared to some communities delivering lower priced, smaller single family homes and build-for-rent homes in lower-end submarkets of the segment for the six months ended April 30, 2025, which we are no longer delivering in the current year.

Current wording

Homebuilding revenue increased 4.3% for the nine months ended July 31, 2026 compared to the same period in the prior year. The increase was due to a 2.8% increase in homes delivered and a 1.5% increase in average sales price. The increase in average sales price was the result of new communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for thenine months ended July 31, 2026 compared to some communities delivering lower priced, smaller single family homes and build-for-rent homes in lower-end submarkets of the segment for thenine months ended July 31, 2025, which we are no longer delivering in the current year.

Previous wording

Income before income taxes decreased $9.2 million to a loss of $8.6 million for the six months ended April 30, 2026 compared to the same period in the prior year. This was primarily due to a $5.1 million decrease in income from unconsolidated joint ventures, a $5.3 million increase in inventory impairments and land option write-offs, along with a decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.

Current wording

Income before income taxes decreased $16.7 million to a loss of $8.4 million for the nine months ended July 31, 2026 compared to the same period in the prior year. This was primarily due to a $7.7 million decrease in income from unconsolidated joint ventures, a $4.3 million increase in inventory impairments and land option write-offs, along with a decrease in gross margin percentage. For a discussion of gross margin see “Homebuilding: Cost of Sales” above.

Previous wording

Homebuilding revenue decreased 11.3% for the six months ended April 30, 2026 compared to the same period in the prior year. The decrease was due to a 17.8% decrease in homes delivered and a $16.5 million decrease in land sales and other revenue, partially offset by a 10.7% increase in average sales price. The increase in average sales price was the result of new communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for the six months ended April 30, 2026 compared to some communities delivering lower priced, smaller single family homes and townhomes in lower-end submarkets of the segment for the six months ended April 30, 2025, which we are no longer delivering in the current year.

Current wording

Homebuilding revenue decreased 9.4% for the nine months ended July 31, 2026 compared to the same period in the prior year. The decrease was due to a 16.1% decrease in homes delivered and a $16.8 million decrease in land sales and other revenue, partially offset by a 9.8% increase in average sales price. The increase in average sales price was the result of new communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for thenine months ended July 31, 2026 compared to some communities delivering lower priced, smaller single family homes and townhomes in lower-end submarkets of the segment for thenine months ended July 31, 2025, which we are no longer delivering in the current year.

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, 2026 and 2025, Federal Housing Administration and Veterans Administration (“FHA/VA”) loans represented 35.5% and 40.6%, respectively, of our total loans. For thesix months ended April 30, 2026 compared to the same period in the prior year, our conforming conventional loan originations as a percentage of our total loans increased from 58.5% to 62.9%. The origination of loans which exceed conforming conventions increased from 0.9% to 1.6% for the six months ended April 30, 2026 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, 2026 and 2025, Federal Housing Administration and Veterans Administration (“FHA/VA”) loans represented 36.4% and 41.0%, respectively, of our total loans. For thenine months ended July 31, 2026 compared to the same period in the prior year, our conforming conventional loan originations as a percentage of our total loans increased from 58.0% to 62.1%. The origination of loans which exceed conforming conventions increased from 1.0% to 1.5% for thenine months ended July 31, 2026 compared to the same period in the prior year.

Previous wording

During thethree and six months ended April 30, 2026 and 2025, financial services provided $10.0 million and $15.8 million of income before income taxes, respectively, compared to $8.4 million and $11.9 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, 2026 compared to the same periods in the prior year was primarily due to 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, 83.6% and 78.1% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the three months ended April 30, 2026 and 2025, respectively, and 81.6% and 79.2% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the six months ended April 30, 2026 and 2025, respectively.

Current wording

During thethree and nine months ended July 31, 2026 and 2025, financial services provided $9.7 million and $25.5 million of income before income taxes, respectively, compared to $13.9 million and $25.8 million for the same periods in the prior year. The decrease in financial services income before income taxes for thethree and nine months ended July 31, 2026 compared to the same periods in the prior year was primarily due to a decrease in the volume of loans closed. In the markets served by our wholly owned mortgage banking subsidiaries, 84.2% and 80.9% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the three months ended July 31, 2026 and 2025, respectively, and 82.5% and 79.9% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the nine months ended July 31, 2026 and 2025, 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 $27.0 million for thethree months ended April 30, 2026 compared to $29.5 million for thethree months ended April 30, 2025 and decreased to $60.7 million for the six months ended April 30, 2026 compared to $62.2 million for the six months ended April 30, 2025. The decrease for the three months ended April 30, 2026 was primarily due to a decrease in bonus expense due to lower profitability. The decrease in the six months ended April 30, 2026 compared to the same period in the prior year was primarily due to lower stock compensation expense compared to the same period in the prior year and.

Current wording

Corporate general and administrative expenses include costs related to operations at our headquarters in New Jersey and New York, including 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 increased to $37.4 million for thethree months ended July 31, 2026 from $35.0 million in the prior year period and to $98.1 million for the nine months ended July 31, 2026 from $97.2 million in the prior year period. The increases were primarily due to higher compensation expense, driven mainly by increased headcount and annual merit increases, as well as higher depreciation expense related to completed software projects and certain leasehold improvements depreciated in the current fiscal year.

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 $10.1 million to a loss of $1.1 million for the three months ended April 30, 2026 and decreased $15.9 million to $2.3 million for the six months ended April 30, 2026 compared to the same periods in the prior year. The decrease was primarily due to less open for sale unconsolidated joint venture communities leading to fewer deliveries. Additionally, several joint venture communities are currently in the early stages of development and incurring typical start-up costs ahead of first deliveries.

Current wording

Income from unconsolidated joint ventures represents our share of earnings or losses from those ventures. Income from unconsolidated joint ventures decreased $12.1 million to $3.4 million for the three months ended July 31, 2026, and by $28.0 million to $5.7 million for thenine months ended July 31, 2026, compared with the same periods in the prior year. The decreases were primarily due to fewer unconsolidated joint ventures communities open for sale, which resulted in fewer deliveries. In addition, several joint venture communities are in the early stages of development and are incurring typical start-up costs before initial deliveries.

Previous wording

Other interest increased $3.3 million to $12.5 million for thethree months ended April 30, 2026 compared to the same quarter of the prior year andincreased $6.0 million to $24.6 million for thesix months ended April 30, 2026 compared to the same period of the prior year. Other interest increased primarily due to an increase in communities in planning, along with higher model lease financing activity during the period.

Current wording

Other interest increased by $4.2 million to $11.4 million for thethree months ended July 31, 2026 and by $10.2 million to $36.0 million for thenine months ended July 31, 2026, compared with the same periods in the prior year. The increases were primarily due to a higher number of communities in planning and increased model lease financing activity during the periods.

Previous wording

For the three months ended April 30, 2026 and 2025, we recorded income tax expense of $0.9 million and $6.8 million, respectively. For the six months ended April 30, 2026 and 2025, we recorded income tax expense of $8.8 million and $18.5 million, respectively. For both the three and six months ended April 30, 2026 and 2025, the expense was primarily due to federal and state tax expense on income (loss) before income taxes and permanent differences, partially offset by energy home credits. Federal tax expense is not paid in cash as it is offset by the use of our existing NOL carryforwards.

Current wording

For thethree months ended July 31, 2026 and 2025, we recorded income tax benefit of $0.6 million and income tax expense of $7.2 million, respectively. For thenine months ended July 31, 2026 and 2025, we recorded income tax expense of $8.2 million and $25.7 million, respectively. The income tax expense or benefit for each period was primarily driven by federal and state taxes on income or loss before income taxes and permanent differences, partially offset by home energy credits. Federal tax expense did not result in cash tax payments because it was offset by the use of our existing NOL carryforwards.

Previous wording

Our total liquidity at April 30, 2026 was $442.0 million, including $310.9 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, 2026 was $379.8 million, including $249.1 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 $413.0 million on domestic land and land development during the first half of fiscal 2026. After land and land development spending and all other operating activities, including revenue received from deliveries, cash from operations was $73.8 million. During the first half of fiscal 2026, cash used in investing activities was $31.3 million, primarily due to a new joint venture entered into during the first half of fiscal 2026, along with spending on capitalized software, partially offset by net cash acquired through acquisitions. Cash used in financing activities was $10.8 million during the first half of fiscal 2026, primarily due to net payments for nonrecourse mortgage financings, net payments for model sale leaseback financings, treasury stock purchases and payments of preferred dividends, partially offset by net proceeds from our mortgage warehouse lines of credit and net proceeds from land banking 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 $644.9 million on domestic land and land development during the first three quarters of fiscal 2026. After land and land development spending and all other operating activities, including revenue received from deliveries, cash from operations was $49.8 million. During the first three quarters of fiscal 2026, cash used in investing activities was $38.3 million, primarily due to a new joint venture entered into during the first three quarters of fiscal 2026, along with spending on capitalized software, partially offset by net cash acquired through acquisitions. Cash used in financing activities was $39.1 million during the first three quarters of fiscal 2026, primarily due to net payments for nonrecourse mortgage financings, net payments for model sale leaseback financings and land bank financings, treasury stock purchases and payments of preferred dividends, partially offset by net proceeds from our mortgage warehouse lines of credit. 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, 2026 and 2025 were for operating expenses, land purchases, land deposits, land development, construction spending, nonrecourse mortgage transactions, model sale leasebacks, state income taxes, interest payments, preferred dividends, equity repurchases, investments in unconsolidated joint ventures and acquisitions. During these periods, we provided for our cash requirements from available cash on hand, home and land sales, land banking transactions, income from unconsolidated joint ventures, financial service revenues and other revenues.

Current wording

Our cash uses during thenine months ended July 31, 2026 and 2025 were for operating expenses, land purchases, land deposits, land development, construction spending, nonrecourse mortgage transactions, model sale leasebacks, state income taxes, interest payments, preferred dividends, equity repurchases, investments in unconsolidated joint ventures and acquisitions. During these periods, we provided for our cash requirements from available cash on hand, home and land sales, land banking transactions, income from unconsolidated joint ventures, financial service revenues and other revenues.

Previous wording

We had nonrecourse mortgage loans for certain communities totaling $32.7 million and $29.5 million, net of debt issuance costs, as of April 30, 2026 and October 31, 2025, respectively, which are secured by the related real property, including any improvements, with an aggregate book value of $55.2 million and $113.9 million, respectively. The weighted-average interest rate on these obligations was 7.2% and 7.4% at April 30, 2026 and October 31, 2025, respectively, and the mortgage loan payments primarily correspond to home deliveries.

Current wording

We had nonrecourse mortgage loans for certain communities totaling $32.4 million and $29.5 million, net of debt issuance costs, as of July 31, 2026 and October 31, 2025, respectively, which are secured by the related real property, including any improvements, with an aggregate book value of $48.0 million and $113.9 million, respectively. The weighted-average interest rate on these obligations was 7.2% and 7.4% at July 31, 2026 and October 31, 2025, respectively, and the mortgage loan payments 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, 2026 and October 31, 2025, we had an aggregate of $101.6 million and $94.3 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, 2026 and October 31, 2025, we had an aggregate of $101.7 million and $94.3 million, respectively, outstanding under several of K. Hovnanian Mortgage’s short-term borrowing facilities.

Previous wording

During thesix months ended April 30, 2026, we repurchased 175,905 shares under the stock repurchase program, with a market value of $18.5 million, or $104.98 per share. 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. As of April 30, 2026, $57.9 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, 2026, we repurchased 175,905 shares under the stock repurchase program, with a market value of $18.5 million, or $104.98 per share. 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. As of July 31, 2026, $57.9 million of our Class A common stock was available to be purchased under the stock repurchase program.

Previous wording

On July 12, 2005, we issued 5,600 shares of 7.625% Series A preferred stock, with a liquidation preference of $25,000 per share. Dividends on the Series A preferred stock are not cumulative and are payable at an annual rate of 7.625%. The Series A preferred stock is not convertible into the Company’s common stock and is redeemable in whole or in part at our option at the liquidation preference of the shares. The Series A preferred stock is traded as depositary shares, with each depositary share representing 1/1000th of a share of Series A preferred stock. We paid dividends of $2.7 million and $5.3 million on the Series A preferred stock for each of the three and six months ended April 30, 2026 and 2025, respectively.

Current wording

On July 12, 2005, we issued 5,600 shares of 7.625% Series A preferred stock, with a liquidation preference of $25,000 per share. Dividends on the Series A preferred stock are not cumulative and are payable at an annual rate of 7.625%. The Series A preferred stock is not convertible into the Company’s common stock and is redeemable in whole or in part at our option at the liquidation preference of the shares. The Series A preferred stock is traded as depositary shares, with each depositary share representing 1/1000th of a share of Series A preferred stock. We paid dividends of $2.7 million and $8.0 million on the Series A preferred stock for each of the three and nine months ended July 31, 2026 and 2025, respectively.

Previous wording

We have investments in unconsolidated joint ventures in various markets where our homebuilding operations are located. Investments in and advances to unconsolidated joint ventures decreased $15.0 million to $148.5 million at April 30, 2026 compared to October 31, 2025. The decrease was primarily due the consolidation of a previously unconsolidated joint venture during the period and an increase in our share of losses recognized for an existing unconsolidated joint venture, partially offset by a new joint venture entered into during the first quarter of fiscal 2026, along with an increase in our share of income recognized for two of our existing unconsolidated joint ventures during the period. As of April 30, 2026 and October 31, 2025, we had investments in five and six unconsolidated homebuilding joint ventures, respectively.

Current wording

We have investments in unconsolidated joint ventures in various markets where we conduct homebuilding operations. Investments in and advances to unconsolidated joint ventures decreased by $8.4 million to $155.1 million at July 31, 2026 compared with October 31, 2025. The decrease was primarily due to the consolidation of a previously unconsolidated joint venture and an increase in our share of losses from an existing unconsolidated joint venture, partially offset by a new joint venture entered into during the first quarter of fiscal 2026 and increased income from two existing unconsolidated joint ventures. As of July 31, 2026 and October 31, 2025, we had investments in five and six unconsolidated homebuilding joint ventures, respectively.

Previous wording

Total inventory, excluding consolidated inventory not owned, increased $49.9 million to $1.4 billion at April 30, 2026 compared to October 31, 2025. Total inventory, excluding consolidated inventory not owned, increased by $116.5 million from the acquisition of a controlling interest and resulting consolidation of KSA and increased $1.3 million in the West. These increases were partially offset by decreases of $10.4 million in the Northeast and $57.5 million in the Southeast. The net decrease in our domestic inventory was primarily attributable to home deliveries, inventory impairments and land option write-offs, land sales, and inventory contributed to new unconsolidated joint ventures during the period, partially offset by new land purchases and land development. Substantially all homes under construction or completed and included in inventory at April 30, 2026 are expected to be delivered during the next six to nine months.

Current wording

Total inventory, excluding consolidated inventory not owned, increased by $141.6 million to $1.4 billion at July 31, 2026 compared with October 31, 2025. The increase included $150.6 million from the acquisition of a controlling interest and the resulting consolidation of KSA, as well as increases of $33.2 million in the Northeast segment and $11.8 million in the West segment. These increases were partially offset by a decrease of $53.9 million in the Southeast segment. The net change in domestic inventory was primarily attributable to home deliveries, inventory impairments and land option write-offs, land sales, and inventory contributed to new unconsolidated joint ventures, partially offset by new land purchases and land development. Substantially all homes under construction or completed and included in inventory at July 31, 2026 are expected to be delivered within the next six to nine months.

Previous wording

Consolidated inventory not owned, which consists of options related to land banking and model financing, increased $36.2 million from October 31, 2025 to April 30, 2026. The increase was primarily due to an increase in land banking transactions, partially offset by a decrease in the sale and leaseback of certain model homes during the period. We have land banking arrangements, whereby we sell land parcels to land bankers and they provide us with an option to purchase finished lots on a predetermined schedule. Because of our options to repurchase these parcels, these transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheet, at April 30, 2026, included inventory of $296.1 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $180.2 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions. In addition, we sell and lease back certain of our model homes with the right to participate in the potential profit when each home is sold to a third-party at the end of the respective lease. As a result of our continued involvement and the ability to repurchase model homes with below market options, these sale and leaseback transactions are considered a financing rather than a sale. Therefore, our Condensed Consolidated Balance Sheet, at April 30, 2026, included inventory of $73.0 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $73.2 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions.

Current wording

Consolidated inventory not owned, which consists of options related to land banking and model financing, increased by $15.4 million from October 31, 2025 to July 31, 2026. The increase was primarily due to higher land banking activity, partially offset by a decrease in sale and leaseback transactions for certain model homes. We have land banking arrangements, whereby we sell land parcels to land bankers and they provide us with an option to purchase finished lots on a predetermined schedule. Because of our options to repurchase these parcels, these transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheet, at July 31, 2026, included inventory of $285.1 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $164.9 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions. In addition, we sell and lease back certain of our model homes with the right to participate in the potential profit when each home is sold to a third-party at the end of the respective lease. As a result of our continued involvement and the ability to repurchase model homes with below market options, these sale and leaseback transactions are considered a financing rather than a sale. Therefore, our Condensed Consolidated Balance Sheet, at July 31, 2026, included inventory of $63.1 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $63.7 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions.

Previous wording

The following tables summarize home sites included in our total residential real estate. The decrease in total domestic home sites available at April 30, 2026 compared to October 31, 2025 is attributable to delivering homes and terminating certain option agreements, partially offset by acquiring new land parcels during the period.

Current wording

The following tables summarize home sites included in our total residential real estate. The slight decrease in total domestic home sites available at July 31, 2026 compared to October 31, 2025 is attributable to delivering homes and terminating certain option agreements, partially offset by acquiring new land parcels during the period.