A homebuilder is out with results after-hours. "'We are pleased to report first quarter results at the top of our guidance range,' said Ara K. Hovnanian, President and CEO of Hovnanian Enterprises. 'During recent months, market conditions in many of our more highly- regulated markets, including California, Florida, Washington, D.C., and the Northeast, have cooled from their previous white hot levels, with respect to both sales pace and price increases,' Mr. Hovnanian continued. 'While conditions in these markets have improved from the period between Thanksgiving and the end of January, they remain slower than they were during the comparable time frame a year ago.'"

"'In certain markets where investors in new homes and condos have been more prevalent over the past few years, it now appears that such investors are no longer contributing to demand, but instead are adding to supply as they list their condos and homes for resale. As a result, we have seen an increase in the level of resale listings in several of our markets.'"

"'However, we expect that sales of new homes will rebound in these markets once the overhang of investor resales is cleared out. Our view is supported by our experience in the Orange County, California market, where this exact pattern occurred about a year ago.'"

"Larry Sorsby, CFO said, 'Our 2006 projections reflect the slower market conditions that we are experiencing currently, as evidenced by a 140 to 190 basis point projected decline in our consolidated homebuilding gross margin and a lower projected number of deliveries from California than we achieved in fiscal 2005. Our first quarter earnings were only about 15% of our projected earnings for the year,' stated Mr. Sorsby."

"'While we expect margins on new sales to be lower as many markets return to a normal, healthy sales environment, without the positive effects of pent-up price increases that have benefited our margins over the past several years, we see no evidence of a 'bubble bursting,' 'Mr. Hovnanian concluded."