Made you look: If you didn't do a double take at that headline, you haven't been reading HW enough. Yet, in a stunningly inexplicable lapse of reason, that's precisely the tack being taken by home builder Hovnanian Enterprises, Inc., which said today that orders for new homes were off by 30 percent during its second quarter (which it just completed). The company, not surprisingly for anyone working in mortgage finance these days, said it would miss previous earnings guidance of a loss per share of $0.05 to $0.20 per share by a wide margin, instead coming in at a loss of around $0.30 per share. Who's to blame for this? To read their press release, it's partly the media's fault:
These contract results reflect a continued challenging operating environment in most of the Company's markets, which were exacerbated by recent problems in the sub-prime mortgage market. The adverse publicity surrounding the sub-prime market has further damaged home buyers' psychology [emphasis added], resulting in decreased demand and leading to continued use of sales incentives.
Now I get it: So the media damaged buyers' collective psyche, and if only that hadn't taken place....well, there would still be the itty-bitty problem that many of those pristine buyers' psyches still wouldn't have been able to find a loan to buy HOV-built homes. Is HOV actually complaining because borrowers are now somewhat educated about the market, and not blindly piling on mortgage debt? I wonder if anyone has ever thought to see if there is a correlation between builder and foreclosure rates -- to see, in particular, if some builders were courting subprime borrowers more than others. (Let's just say that HOV doesn't exactly compete with Toll Brothers for market share.) At least, that's the only lucid guess I can come up with for actually whining to the media -- in a media release -- that said media's coverage of the subprime market actually contributed to a builder whiffing on its earnings guidance.