CHICAGO (Reuters) - U.S. homebuilder Hovnanian Enterprises <HOV.N> posted a slightly narrower quarterly loss on Tuesday but said that the U.S. housing market showed signs of further deterioration during the quarter.

For the fiscal fourth quarter ended October 31, the No. 6 U.S. builder said it lost $450.5 million, or $5.79 per share, compared with a net loss of $469 million, or $7.42 per share, a year earlier.

The Red Bank, New Jersey-based company said revenues tumbled 48 percent to $724.4 million during the quarter.

"Since mid-September, the housing market has deteriorated in lock-step with the widening financial crisis and declines in broader economic conditions," Ara Hovnanian, the company's president and chief executive, said in a statement.

"Despite the headwinds we faced, we ended the year with $838 million in cash, slightly above the guidance we gave earlier in the fall before conditions worsened."

The results were released just a fewhours after the U.S. Federal Reserve surprised investors by cutting its benchmark interest rate to near zero, citing the economy's weakness.

The central bank also said it planned to start buying "large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets."

The move and announcement sent stocks sharply higher late in the day. Some of the biggest beneficiaries of the rally were hard-hit homebuilder stocks, including Hovnanian, which rose nearly 30 percent.

Like other builders, Hovnanian has been floundering amid an increasingly hostile economic climate. The nationwide housing slump, rooted in the rampant risky mortgage practices that fueled the boom years of 2002 to 2006, generated a wave of foreclosures that in turn created an excess of supply.

The supply-demand imbalance drove down prices and devalued builders' inventory of land, forcing them to take impairment charges on lots purchased at peak prices during the boom years.

Then more recently, the housing slump combined with the implosion of the financial sector, the decline in the stock market and other broader phenomena to weaken consumer confidence and erode demand for new homes still further.

The conditions have pushed U.S. homebuilder sentiment to a record low and held it there for two months, according to the National Association of Home Builders.

The conditions have pushed U.S. homebuilder sentiment to a record low and held it there for two months, according to the National Association of Home Builders, which on Monday said its preliminary NAHB/Wells Fargo Housing Market Index was 9 in December, unchanged from November when it reached its lowest level on record since its launch in January, 1985.

Builders have responded by slashing supply. Commerce Department data released on Tuesday showed that U.S. housing starts and permits fell to record lows in November, with starts falling 18.9 percent to a seasonally adjusted annual rate of 625,000 units from 771,000 units in October. New building permits plummeted 15.6 percent to 616,000 units from 730,000 units in October.

While supply and demand need to realign to set the stage for an eventual recovery, in the meantime many builders of new homes are finding themselves squeezed between the cost of servicing their debt and a steadily decreasing flow of cash due to years of revenue declines.

To cope, builders have tried to shore up their balance sheets by selling land and reducing debt.

Hovnanian, for example, recently concluded a debt exchange that, although undersubscribed, reduced its outstanding debt of about $2.51 billion by $42.1 million, said Chief Financial Officer Larry Sorsby, who sees the exchange as a first in a series of debt reduction moves, including more exchange offers.

(Reporting by Helen Chernikoff, James Kelleher, Julie Haviv, Doug Palmer; editing by Carol Bishopric)

Publié le 16 Décembre 2008 Copyright © 2008 Reuters