By Nicholas G. Miller

Hovnanian posted lower first-quarter profit as a stagnant housing market continued to weigh on margins.

The homebuilder posted net income of $20.9 million, down from $28.2 million the year before. On a per-share basis, earnings were $2.62 a share, down from $3.58 a share the year prior.

Revenue fell to $632 million from $673.6 million. Homebuilding gross margin percentage fell to 10.1% from 15.2% last year.

Homebuilders have suffered from slow home sales as high mortgage rates and home prices, in addition to economic uncertainty have put off buyers. Many builders have been forced to offer aggressive sales incentives, often in the form of mortgage buydowns, cutting into their margins.

The company guided for second-quarter revenue of $625 million to $725 million, adjusted homebuilding gross margin of 13% to 14% and adjusted income before income taxes between breakeven and $10 million.

The company said it expects adjusted income before income taxes to increase in the second half of fiscal 2026, particularly in the fourth quarter.

"We're optimistic because we've seen better contract activity in January and February, and we anticipate delivering more homes from newer, higher-margin communities in the latter part of the year, including a higher percentage of higher margined to-be-built homes," said Chief Executive Ara Hovnanian.

"Looking ahead, the long-term outlook for the homebuilding industry remains compelling, supported by a structurally undersupplied market and strong demographic trends," Hovnanian said.

Write to Nicholas G. Miller at nicholas.miller@wsj.com.

(END) Dow Jones Newswires

February 25, 2026 09:36 ET (14:36 GMT)

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