Hovnanian Enterprises - the new home builders - announced another quarter of dreadful numbers. Second quarter loses could be as high as $0.30 a share, far worse that the company's original suggestion of a $0.05-0.20 per share loss. Furthermore, the company also expects to take a $15-20 million hit on abandoning deposits on land it would not develop. Overall, their losses could be as high as $0.45 to $0.50 per share.

The company trotted out the housing sector's excuse of the moment - the subprime market, announcing that "The adverse publicity surrounding the subprime market has further damaged homebuyers' psychology, resulting in decreased demand and leading to continued use of sales incentives." However, Hovnanian were hardly catering for the subprime client. Nevertheless, the subprime crash is the housing equivalent of the black death; it kills everything it touches.

Sales performance was awful. Hovnanian delivered just 3,196 homes, down from 4,555 last year. However, the company had some limited success in reducing cancellations which fell from 36% to 32% compared to the last quarter of 2004. Looking forward, things look bad, with net contracts were down 21% to 3,116.

Hovnanian share prices are down a shocking 67 percent since their peak in the summer of 2005. Who would have known back then that housing construction shares would have been such a bad investment? Actually, anyone who had bothered to think about the bloated housing bubble. It was obvious that it couldn't go on and that Hovnanian Enterprises would be an early victim.