What changed in this filing

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Item 1. Business

2025-12-22 compared with 2024-12-18 · 60 added, 55 removed, 228 unchanged (34% of the section changed)

56 unchanged sentences

We are committed to being an employer that fosters the growth of each associate, while building an inclusive and diverse workforce.

We believe that our focus on diversity and inclusion across the organization positions the Company to deliver innovation and growth.

We have a diverse associate base comprised of 27.3 % non-white associates as of October 31, 2024 .

Additionally, as of October 31, 2024 , 43.6 % of our associates were women, and women represent 38.5 % of all associates in manager and more senior positions.

Promoting a diverse and inclusive work environment is a major priority at Hovnanian.

In 2020 , the Company formed a Diversity & Inclusion Committee that continues to be an important initiative.

The committee is led by the CEO and comprised of members of senior leadership and associates in different functions throughout the organization representing various backgrounds.

The objective of the committee is to advise on and evaluate the Company’s diversity and inclusion initiatives and to offer suggestions and guidance.

All associates are required to take a diversity and inclusion training course on an annual basis.

Those in leadership positions (representing approximately 21.8 % of all associates) are required to participate in more extensive diversity and inclusion training sessions.

The Company is also a founding member of the Building Talent Foundation ( “ BTF ” ) whose mission is to advance the education, training and careers of people from underrepresented groups in the fields of skilled technical workers and as business owners in the residential construction industry.

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In fiscal 2024 , we extended our partnership and financial commitment with BTF for another two years.

Over the last three years, our leadership team has conducted quarterly Town Halls.

These events have become a staple in the organization and serve as an opportunity for associates to hear from senior leadership candidly about our Company and directly ask questions of our CEO, CFO, Executive Vice President and Group Presidents.

In fiscal 2023, the Company also introduced two new channels for engaging associates companywide, “ Lunch & Learns ” and “ Coffee Chats ” .

The goal of these new platforms is to fuel our companywide objective to foster a culture of engagement and facilitate more two -way communication.

Over the last four years, our leadership team has conducted quarterly Town Halls.

The Company's “ Lunch & Learns ” and “ Coffee Chats ” platforms for associates are designed to fuel our companywide objective to foster a culture of engagement and facilitate more two -way communication.

Through a combination of competitive benefits and educational programs, we believe that we positively contribute to the well-being of our associates and the communities in which they live and work.

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In light of the Company’s experience managing the novel coronavirus ( “ COVID- 19 ” ) pandemic and the recognition of the associated environmental benefits, the Company previously introduced a hybrid work schedule and continued its use throughout fiscal 2025 , whereby most office associates may work two days a week from home.

We believe this change to a hybrid work model promotes a healthier work and home life balance for our associates while simultaneously providing the environmental benefits of having fewer vehicles on the road.

We believe a hybrid work model promotes a healthier work and home life balance for our associates while simultaneously providing the environmental benefits of having fewer vehicles on the road.

In addition to the weekly hybrid schedule, non-field associates can work remotely up to eight weeks a year.

We also have committed considerable resources to furthering our associates’ personal and professional growth.

We have a repository of over 500 training modules/courses to facilitate these learning sessions in both in-person and virtual settings, including mandatory diversity, ethics, workplace harassment prevention, cybersecurity and safety training courses.

January 1, 2026, we plan to reinstate the tuition reimbursement benefit, which has been suspended since May 2009.

Additionally, w e offer a comprehensive library of over 500 training modules/courses to facilitate learning sessions both in-person and virtually, including required courses on diversity, ethics, workplace harassment prevention, cybersecurity and safety training courses.

Corporate Offices and Available Information

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Business Strategies

In response to changing market conditions, we have taken a disciplined and strategic approach to our new land purchases at price points that we believe will generate appropriate investment returns needed to sustain profitability, while taking into consideration the current market environment of elevated sales concessions.

The housing market continues to be driven by positive fundamentals and as a result we increased our community count and continued to invest in land and land development during the year.

In addition, we intend to continue to focus on our historic key business strategies, as enumerated below.

We believe that these strategies separate us from our competitors in the residential homebuilding industry and the adoption, implementation and adherence to these principles will continue to benefit our business.

As a result of the sharp increase in interest rates that began in fiscal 2022 , we have shifted our focus to increasing the availability of quick-move-in homes (“QMI homes”).

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Beginning in fiscal 2023 , we began executing “ Build-For-Rent ” agreements to supplement our existing for sale business.

The Build-For-Rent sales channel added incremental deliveries during fiscal 2023 and fiscal 2024, which allowed us to increase inventory turnover.

The Build-For-Rent sales channel added incremental deliveries during fiscal years 2025, 2024 and 2023 , which allowed us to increase inventory turnover.

We remain focused on maintaining adequate liquidity and identifying investment opportunities that make economic sense in light of our current sales prices and sales paces.

Our excess liquidity in fiscal years 2025 , 2024 and 2023 allowed us to repurchase $ 26.6 million, $ 113.5 million and $ 245.0 million in aggregate principal of senior secured notes, respectively.

Also, in May 2024, we completed a debt exchange resulting in a $75.3 million principal reduction of our senior notes and term loans which included an aggregate cash payment of $31.5 million.

We also repurchased 188,800 shares of our Class A common stock with an aggregate market value of $26.5 million in fiscal 2024.

In response to changing market conditions, we have been strategic in new land purchases at pricing that we believe will generate appropriate investment returns needed to sustain profitability.

After the past several years of concentrating

on debt reduction, in fiscal 2024 we shifted our focus back to growth as a focal point.

housing market continues to be driven by positive fundamentals and as a result

we increased our lot count, community count and spending on land and land

development during the year.

In addition, we intend to continue to focus on our historic key business strategies, as enumerated below.

In May 2024, we completed a debt exchange resulting in a $ 75.3 million principal reduction of our senior notes and term loans, which included an aggregate cash payment of $ 31.5 million.

In September 2025, we issued $ 900.0 million in aggregate principal amount of senior notes.

The net proceeds therefrom, along with cash on hand, were used to redeem the entire principal amount of our then outstanding senior secured notes and payoff in full our secured term loan credit facility.

We also extended the maturity date of our senior secured revolving credit facility to June 2028.

In addition to the debt transactions, during fiscal years 2025 , 2024 and 2023 , we also repurchased 257,908 shares, 188,800 shares and 118,478 shares, respectively, of our Class A common stock with an aggregate market value of $ 30.1 million, $ 26.5 million and $ 4.8 million, respectively.

These strategic actions contributed to our

ongoing efforts to manage and simplify the Company’s capital structure and

strengthen its financial position.

Our goal is to become a significant builder in each of the selected markets in which we operate, which will enable us to achieve economies of scale and differentiate ourselves from most of our competitors.

As noted above, we offer a broad product array to provide housing to a wide range of customers.

Our diverse product array includes single-family detached homes, attached townhomes and condominiums, urban infill and active lifestyle homes.

We are committed to customer satisfaction and quality in the homes that we build.

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In most instances, we have the right to cancel any of our land option agreements by forfeiture of our deposit on the agreement.

In fiscal 2024 , 2023 and 2022 , rather than purchase additional lots in underperforming communities, we took advantage of this right and walked away from 3,800 lots, 3,838 lots and 5,121 lots, respectively, out of 39,059 total lots, 28,227 total lots and 27,617 total lots, respectively, under option, resulting in charges to income before taxes of $1.6 million, $ 1.5 million and $ 5.7 million, respectively.

In fiscal 2025 , 2024 and 2023 , rather than purchase additional lots in underperforming communities, we took advantage of this right and walked away from 14,902 lots, 3,800 lots and 3,838 lots, respectively, out of 45,289 total lots, 39,059 total lots and 28,227 total lots, respectively, under option, resulting in charges to income before income taxes of $ 18.2 million, $ 1.6 million and $ 1.5 million, respectively.

Design - Our residential communities are generally located in urban and suburban areas easily accessible through public and personal transportation.

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Historically, a majority of our single-family detached homes were constructed after the signing of a sales contract and mortgage approval was obtained, which limits the buildup of inventory of unsold homes and the costs of maintaining and carrying that inventory.

Beginning in fiscal 2022 and continuing through fiscal 2024 , we have increased our inventory of QMI homes in connection with our current business strategy discussed above.

Materials and Subcontractors - We attempt to maintain efficient operations by utilizing standardized materials available from a variety of sources.

In addition, we generally contract with subcontractors to construct our homes.

We are actively managing the number of QMI homes in connection with our current business strategy discussed above.

Materials - We attempt to maintain efficient operations by utilizing standardized materials available from a variety of sources.

We have reduced construction and administrative costs by consolidating the number of vendors serving certain markets and by executing national purchasing contracts with select vendors.

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The impact and the particular materials associated with the delays varied from market to market.

We have improved our cycle times since the beginning of fiscal 2023 by approximately 30 days but are still currently experiencing increased construction cycle times of 30 - 45 days over our pre-pandemic average in many of our markets.

We have improved our cycle times since the beginning of fiscal 2023 by approximately 30 days, which brings us closer to our pre-pandemic average in many of our markets.

We cannot predict the extent to which shortages in necessary materials or labor will re-occur in our markets in the future.

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We make use of our website, internet, newspaper, radio, television, magazine, billboard, video and direct mail advertising, special and promotional events, illustrated brochures and full-sized and scale model homes in our comprehensive marketing program.

We have also started offering curated “ Looks ” packages for customers to select, rather than a large number of a la carte options.

This approach has continued to expand and provides customers with a more streamlined selection process and allows us to be more efficient in purchasing, sales and construction.

We also offer curated “ Looks ” packages for customers to select, rather than a large number of a la carte options.

This approach provides customers with a more streamlined selection process and allows us to be more efficient in purchasing, sales and construction.

We have a national call center which is responsible for follow up generated by our website and our digital marketing efforts.

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These activities are performed by our associates, together with independent architects, consultants and contractors.

Our associates also carry out long-term planning of communities.

Our associates also conduct long-term planning of communities.

A residential development generally includes single-family detached homes and/or a number of residential buildings containing from two to 24 individual homes per building, together with recreational amenities, such as swimming pools, tennis courts, clubhouses, open areas and tot lots.

Housing Revenues

Information on housing revenues, homes delivered and average sales price by segment for the year ended October 31, 2025 , is set forth below:

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Net Sales Contracts

The dollar value of our net sales contracts, excluding unconsolidated joint ventures, was $ 2.8 billion and $ 2.5 billion for the years ended October 31, 2024 and 2023 , respectively, and the number of homes contracted increased 11.6 % to 5,186 in fiscal 2024 from 4,647 in fiscal 2023 .

Information on the dollar value of net sales contracts by segment for the years ended October 31, 2024 and 2023 , is set forth below:

Percentage of

Information on the dollar value of net sales contracts by segment for the year ended October 31, 2025 is set forth below:

(In thousands)

Net Sales Contracts

Consolidated total

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Of the total remaining homes available, 971 were under construction or completed (including 64 models and sales offices), and 9,539 were under option.

At October 31, 2024 and 2023 , including domestic unconsolidated joint ventures, we had a backlog of signed contracts for 2,052 homes and 2,196 homes, respectively, representing a 6.6 % decrease, with sales values aggregating $ 1.2 billion and $ 1.3 billion, respectively.

At October 31, 2025 , including domestic unconsolidated joint ventures, we had a backlog of signed contracts for 1,517 homes with sales values aggregating $ 0.9 billion.

Our focus on QMI homes continues to result in higher backlog conversion.

Additionally at October 31, 2024 and 2023, we had a backlog of signed contracts for 276 homes and 50 homes, respectively, from our unconsolidated joint venture in the Kingdom of Saudi Arabia.

Additionally at October 31, 2025 , we had a backlog of signed contracts for 723 homes from our unconsolidated joint venture in the Kingdom of Saudi Arabia.

The majority of our backlog at October 31, 2025 is expected to be completed and closed within the next six to nine months.

Current base prices for our homes in contract backlog at October 31, 2025 , range from $ 182,000 to $ 1,100,000 in the Northeast, from $ 275,000 to $ 1,191,000 in the Southeast and from $ 284,000 to $ 948,000 in the West.

At November 30, 2024 and 2023 , our backlog of signed contracts, including domestic unconsolidated joint ventures, was 2,111 homes and 2,158 homes, respectively, with sales values aggregating $ 1.3 billion for both periods.

Additionally at November 30, 2024 and 2023, we had a backlog of signed contracts for 20 homes for both periods, from our unconsolidated joint venture in the Kingdom of Saudi Arabia.

For information on our backlog excluding unconsolidated joint ventures, see the contract table in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Homebuilding:

Key Performance Indicators.”

Sales of our homes typically are made pursuant to a standard sales contract that provides the customer with a statutorily mandated right of rescission for a period ranging up to 15 days after execution.

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(Dollars in thousands)

Value ( 1 )( 2 )

Combined total

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For properties under option, as of October 31, 2025 , option fees and deposits were $ 99.0 million.

As of October 31, 2024 , we spent an additional $ 52.4 million in nonrefundable predevelopment costs on such properties, including properties not under option but under evaluation.

The book value for properties under option includes land banking costs of $ 23.6 million, which is included in “ Consolidated inventory not owned ” on our Consolidated Balance Sheets.

As of October 31, 2025 , we had also spent an additional $ 37.4 million in nonrefundable predevelopment costs.

We either option or acquire improved or unimproved home sites from land developers or other sellers.

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Labor and material shortages that were initially due to the COVID- 19 pandemic have improved.

For example, we previously experienced a significant rise in lumber prices caused by supply chain issues, but due to increased availability prices began to decrease during the second half of fiscal 2022 and into fiscal 2024 .

For example, we previously experienced a significant rise in lumber prices caused by supply chain challenges.

These difficulties created temporary constraints

that drove up costs and affected our ability to source necessary materials in a

timely manner.

As supply chain conditions have improved and the availability of

lumber has increased, the pressure on prices has eased.

We cannot predict, however, the extent to which shortages in necessary raw materials or labor may occur in the future.

1 unchanged sentence

Our homebuilding operations are highly competitive.

We are among the top 20 homebuilders in the United States in both homebuilding revenues and home deliveries.

We are among the top 20 homebuilders in the United States in terms of both homebuilding revenues and home deliveries.

We compete with numerous real estate developers in each of the geographic areas in which we operate.

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Any such delays or costs could have a negative effect on our future revenues and earnings.

We are also subject to a variety of local, state, federal and foreign laws and regulations concerning protection of health and the environment, including those regulating the emission or discharge of materials into the environment, the management of storm water runoff at construction sites, the handling, use, storage and disposal of hazardous substances, impacts to wetlands and other sensitive environments, and the remediation of contamination at properties that we have owned or developed or currently own or are developing (“environmental laws”).

The particular environmental laws which apply to any given community vary greatly according to the community site, the site’s environmental conditions and the present and former uses of the site.

See Risk Factors – “ Homebuilders are subject to a number of federal, local, state, and foreign laws and regulations concerning the development of land and homebuilding, sales and customer financing processes and the protection of the environment, which can cause us to incur delays and costs associated with compliance and which can prohibit or restrict our activity in some regions or areas”, Item 3 “Legal Proceedings” and Note 18 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Despite our past ability to obtain necessary permits and approvals for our communities, we anticipate that increasingly stringent requirements will be imposed on developers and homebuilders in the future.

Although we cannot reliably predict the extent of any effect these requirements may have on us, they could result in time-consuming and expensive compliance programs and in substantial expenditures, which could cause delays and increase our cost of operations.

In addition, our ability to obtain or renew permits or approvals and the continued effectiveness of permits already granted or approvals already obtained is dependent upon many factors, some of which are beyond our control, such as changes in policies, rules and regulations and their interpretation and application.

We are also subject to a variety of local, state, federal and foreign laws and regulations concerning environmental, health and safety matters, including those regulating the emission or discharge of materials into the environment, the management of storm water runoff at construction sites, the handling, use, storage and disposal of hazardous substances, impacts to wetlands and other sensitive environments.

Certain environmental laws and regulations also

impose obligations for the cleanup of properties affected by hazardous

substance spills or releases on a joint and several basis and without regard to

fault and liability.

We may become liable, either contractually or by operation

of law, for remediation costs at any properties currently or formerly owned,

leased or operated by us, or at third-party sites, such as off-site disposal

We may also be subject to third-party claims arising from the presence

of hazardous substances, including claims for hazardous substances that have

migrated offsite (e.g., property damage) or exposure to hazardous substances

(e.g., personal injury).

In addition, we are generally required to obtain

permits and other approvals under environmental laws and regulations to carry

out our operations.

The particular laws and regulations that apply to a site may vary greatly according to the specific factors at each site, for example, due to the type of community, the site’s environmental conditions and the present and former uses of the site.

These and other environmental, health and safety

laws and regulations can result in delays, substantial costs, fines or

penalties and can prohibit or severely restrict development

and homebuilding activity.

See Risk Factors – “ Homebuilders are subject to a number of federal, local, state, and foreign laws and regulations concerning the development of land and homebuilding, sales and customer financing processes and environmental, health and safety matters, which can cause us to incur delays and costs associated with compliance and which can prohibit or restrict our activity in some regions or areas”, Item 3 “Legal Proceedings” and Note 18 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business