Hovnanian Enterprises last week ran a three-day "Deal of the Century" sale at its communities nationwide offering discounts of up to 30 percent on certain homes. The big New Jersey-based home builder said it generated sales of 2,100 homes -- 10 times greater than its weekly sales average over the past three months. Ara K. Hovnanian, president and CEO of the company, said, "The high level of traffic we saw ... convinces us that there are interested buyers in the market today. However, with all of the negative publicity about the housing market, many home buyers were hesitant to buy because they worried that even lower prices might be offered later." Home buyers aren't the only ones who should be hesitant. For investors reading this news, it's a good reminder of why builders' shares have consistently traded at a low price-to-earnings (PE) ratio relative to the overall market. According to Standard & Poor's, during the past several years the S&P 500 Index has generally been price...
Sep 27
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