Review of Financial Results Fourth Quarter Fiscal 2013

Note: All statements in this presentation that are not historical facts should be considered as forwardlooking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forwardlooking statements. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward looking statements are reasonable, we can give no assurance that such plans, intentions, or expectations will be achieved. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and industry and business conditions and impacts of the sustained homebuilding downturn, (2) adverse weather and other environmental conditions and natural disasters, (3) changes in market conditions and seasonality of the Companys business, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on the Companys operations and activities imposed by the agreements governing the Companys outstanding indebtedness, (13) the Company's sources of liquidity, (14) changes in credit ratings, (15) availability of net operating loss carryforwards, (16) operations through joint ventures with third parties, (17) product liability litigation, warranty claims and claims by mortgage investors, (18) successful identification and integration of acquisitions, (19) significant influence of the Companys controlling stockholders, (20) changes in tax laws affecting the after-tax costs of owning a home, (21) geopolitical risks, terrorist acts and other acts of war, and (22) other factors described in detail in the Companys Annual Report on Form 10-K for the year ended October 31, 2012. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Improving Operating Results

Total Revenues
$ in millions

Homebuilding Gross Margin

20.3%

22.6%

$592 $358

$423

$478
17.0%

18.9%

Q1 13

Q2 13

Q3 13

Q4 13

Q1 13

Q2 13

Q3 13

Q4 13
Pre-tax Income (Loss)

Total SG&A & Interest Expenses as a % of Total Revenues

SG&A

Interest

$34 $10
13.8% 9.6% 12.2% 11.8% 10.6% 8.0%
7.5%

6.7%

($1)
($21)

Q1 13 Q2 13 Q3 13 Q4 13

Q1 13 Q2 13 Q3 13 Q4 13

Q1 13

Q2 13

Q3 13

Q4 13

$ in millions

Number of 4 4 5 Sundays

Dec-10 Dec-11 Dec-12

$139 $145 $191 $115 $167 $222 $118 $200 $224 $114 $203 $250 $149 $164 $185 $106 $175 $199 $130 $168 $163

$69 $86 $109

Includes unconsolidated joint ventures.

5 5 4 4 4 4 4 4 5 4 5 4 5 4 4 4 4 5 5 5 4 4 4 4 4 5 5 5 4 4 4 4 4

Jan-11 Jan-12 Jan-13 Feb-11 Feb-12 Feb-13 Mar-11 Mar-12 Mar-13 Apr-11 Apr-12 Apr-13 May-11 May-12 May-13 Jun-11 Jun-12 Jun-13 Jul-11 Jul-12 Jul-13 Aug-11 Aug-12 Aug-13 Sep-11 Sep-12 Sep-13 Oct-11 Oct-12 Oct-13 Nov-11 Nov-12 Nov-13

$112

$167 $160 $115 $177 $161 $124 $169 $169 $95 $133 $150
4

Dollar Amount of Net Contracts Per Month

Monthly Net Contracts Per Active Selling Community

3.2 3.6

3.3

3.4

2.1 2.8

2.8

2.6 2.8

3.1 2.6

2.4

2.7

2.5 2.2

2.6

1.4 2.2

2.1

2.5 2.3

2.3

Nov-12
4 385

Aug-12

Aug-13

May-12

Number of Sundays

May-13

Dec-11 Dec-12 Monthly Net Contracts

Jan-12 Jan-13

Feb-12 Feb-13

Mar-12 Mar-13

Apr-12 Apr-13

May-12 May-13

Jun-12 Jun-13

Jul-12 Jul-13

Aug-12 Aug-13

Sep-12 Sep-13

Oct-12 Oct-13

Nov-12 Nov-13

297

409

457

550

528

622

612

640

635

688

506

534

506

583

529

451

484

433

495

417

464

465

Includes unconsolidated joint ventures.

Nov-13
4 382

Jan-12

Jan-13

Feb-12

Feb-13

Sep-12

Sep-13

Jul-12

Jun-12

Dec-11

Dec-12

Jun-13

Apr-12

Apr-13

Jul-13

Oct-12

Mar-12

Mar-13

Oct-13

2.0 1.8
5

Annual Net Contracts Per Active Selling Community

Actual Seasonally Adjusted
Average: 54.2 Average: 44.0

48.1 47.2

42.7

48.2 39.0 38.7

52.3

56.6 53.7 34.2 25.2 17.7 23.3 23.1 21.3

28.1 30.7

1998

2003

2011

1997

1999

2000

2001

2002

2004

2005

2006

2007

2008

2009

2010

2012

Calculated based on a five quarter average of active selling communities, excluding unconsolidated joint ventures.

2013

Net Contracts per Community, Trailing Twelve Months

50.0

40.1 40.0

38.6 33.7 33.6 30.9 30.5 29.6 28.2

30.0

27.3

27.1

26.7 23.2

20.0

19.6

10.0

0.0 MDC (Sep Q3) NVR (Sep Q3) Beazer (Sep Q4) Hovnanian (Oct Q4) KB Home (Aug Q3) Lennar (Aug Q3) Stan Pac (Sep Q3) Meritage (Sep Q3) Pulte (Sep Q3) M/I Homes (Sep Q3) Ryland (Sep Q3) Toll (Jul Q3) DR Horton (Sep Q4)

Calculated based on year-end average of actual selling communities, excluding unconsolidated joint ventures. Source: Company SEC filings, press releases as of 12/12/13

Active Selling Communities

During fiscal 2013, we opened 91 communities and closed out 71 communities.
Consolidated Newly Identified Consolidated Legacy

192 186

172 26

175
26

177

20
21

19

165

172

146

149

158

Oct. 12
Unconsolidated Joint Ventures

Jan. 13
18

Apr. 13
13

Jul. 13
12

Oct. 13
10

17

Active selling communities are open for sale communities with 10 or more home sites available.

Increasing Lots Controlled

Deliveries Net Additions

3,900

Net additions of approximately 7,100 lots in excess of deliveries, over six quarters
2,700 2,400

3,800

1,800 1,750
1,387

1,816

1,600 1,188

1,424

1,502

Q3 12

Q4 12

Q1 13

Q2 13

Q3 13

Q4 13

Note: Net additions include new options, new lots purchased but not previously optioned and walk aways from new options, including unconsolidated joint ventures. Note: Deliveries include unconsolidated joint ventures.

Backlog Growth Should Lead to Increased Revenues

Backlog $
($ in millions)

Backlog #

$848
$742

2,392 2,145

Q4 2012
Includes unconsolidated joint ventures.

Q4 2013

Q4 2012

Q4 2013
10

Gross Margin Improvements

18.2%

18.3%

16.5%

17.4%

Q2 11

14.8%

Q3 11

15.3%

Q4 11

15.5%

Q1 12

Q2 12

Q3 12

Q4 12

Q1 13

17.0%

Q2 13

18.9%

Q3 13

20.3%

% of Deliveries from Newly Acquired Land

39%

43%

58%

58%

61%

67%

71%

74%

76%

77%

76%

Excludes interest related to homes sold. During the fourth quarter of 2013, there were $19.2 million of impairment reversals related to deliveries, compared to $20.7 million in the fourth quarter of 2012.

Q4 13
11

22.6%

Leveraging our SG&A Expenses

21.9%

20.3%

10.6%

17.1%

13.8%

13.9%

16.3%

12.2%

12.4%

11.8%

16.9% 10.0%

* 9.2%

Q1 11

Q1 12

Q1 13

Q2 11

Q2 12

Q2 13

Q3 11

Q3 12

Q3 13

Q4 11

Q4 12

$ in millions

$55

$46

$49

$52

$47

$52

$47

$48

$56

$58

$49

Total SG&A excluding unusually high expenses(1)

Actual total SG&A

Note: Total SG& A as a percentage of total revenues. Total SG&A includes homebuilding selling, general and administrative and corporate general and administrative. * Hovnanian excludes $8.5 million of unusually high expenses due to a substantial increase in our construction defect reserve based on our annual actuarial study, as well as a reserve for a receivable from a prior year land sale.

Q4 13

$63

12

Reloading Our Land Position

Lots Purchased or Optioned Since January 31, 2009
Lots Communities

Roll Forward First Quarter

Total Additions Walk Aways Net Change Total Additions Walk Aways Net Change 1,800 -200 1,600 3,100 -400 2,700

Roll Forward Second Quarter

Purchased 16,100

507(1) Optioned 13,300

Roll Forward Third Quarter(2)

Total Additions Walk Aways Net Change 4,100 -200 3,900 4,500 -700 3,800

Roll Forward Fourth Quarter

Joint Venture 4,500 35

Total Additions Walk Aways Net Change

Total

33,900

542

As of October 31, 2013 approximately 22,500 lots remaining.

Notes: (1) Excludes 112 communities where we walked away from all of the lots in those communities. (2) Third quarter 2013 total additions included 4,000 new options and 100 lots purchased but not controlled prior to 05/01/13.

14

Land Positions by Geographic Segment

October 31, 2013 # Lots Owned Segment Northeast Mid-Atlantic Midwest Southeast Southwest West Total Excluding Mothballed Lots 1,088 2,353 2,488 860 2,337 715 9,841 Mothballed Lots 1,003 280 108 495 0 4,599 6,485 Optioned 2,677 2,965 1,948 2,480 4,723 730 15,523 Total 4,768 5,598 4,544 3,835 7,060 6,044 31,849

86% of options are newly identified lots Excluding mothballed lots, 79% of owned and optioned lots are newly identified lots

Excluding unconsolidated joint ventures.

15

Mothballed Lots
As of October 31, 2013

# of Lots Northeast (NJ, PA) Mid-Atlantic (DE, MD, VA, WV) Midwest (IL, MN, OH) Southeast (FL, GA, NC, SC) Southwest (AZ, TX) West (CA) Total 1,003 280 108 495 0 4,599 6,485

In 50 communities with a book value of $116 million net of impairment balance of $432 million Unmothballed approximately 3,600 lots in 63 communities since January 31, 2009
16

Adjusted Hovnanian Stockholders Equity

$ in millions

$494

($433)

10/31/2013

Adjusted 10/31/2013

(1)

(1) Total Hovnanian Stockholders Deficit of $(433) million with $927 million valuation allowance added back to Stockholders Equ ity .

17

Credit Quality of Homebuyers

Fiscal Year 2013:

Fiscal Year 2012:

Average LTV: 85% Average CLTV: 85% ARMs: 3.1% FICO Score: 746

Average LTV: 87% Average CLTV: 87% ARMs: 2.3% FICO Score: 739

Capture Rate: 71%

Capture Rate: 76%

*Loans originated by our wholly-owned mortgage banking subsidiary.

18

Hovnanian Mortgage Breakdown*

Fiscal Year 2013

Prime (Full Doc: Conforming) 62.7% VA 11.2%

FHA 21.5%

Fiscal Year 2012

All Jumbo Loans 3.0% USDA 1.6%

Prime (Full Doc: Conforming) 53.7%

FHA 27.8%

VA 13.9%

All Jumbo Loans 1.6%

USDA 3.0%

*Loans originated by our wholly-owned mortgage banking subsidiary.

19

Debt Maturity Profile

October 31, 2013 ($ in millions)

Since October 2008, reduced debt by more than $975 million

$577 $374 $259 $220 $82 $121 $87 $195

Current 2013 Liquidity Position (1)

2014

2015

2016

2017

2018

2019

2020

2021

2022

Senior Unsecured Notes 2% & 5% Senior Secured Notes Senior Unsecured Exchangeable & Amortizing Notes Senior Secured Notes
Note: Shown on a fiscal year basis, at face value. Excludes TEU. .(1) Current Liquidity Position is $324.3 million of homebuilding cash, including $5.2 million of restricted cash required to collateralize letters of credit, and $49.2 million of availability under revolving credit facility as of October 31, 2013.

20

($ in Millions)

Liquidity Target We are comfortable at the lower end of the range

$374

$279

(1) (2)

(1) Liquidity Position 07/31/13 is $226.7 million of homebuilding cash, including $5.2 million of restricted cash required to collateralize letters of credit, and $52.2 million of availability under revolving credit facility as of July 31, 2013. (2) Current Liquidity Position 10/31/13 is $324.3 million of homebuilding cash, including $5.2 million of restricted cash required to collateralize letters of credit, and $49.2 million of availability under revolving credit facility as of October 31, 2013.

21

Inventory Turnover

2.1 1.7 1.4 1.1

2002

2011

2012

Inventory turnover derived by dividing cost of sales, excluding capitalized interest, by the five quarter average homebuilding inventory, excluding capitalized interest and inventory not owned.

2013

22

Appendix

23

Fourth Quarter Results

($ in millions)

2013 $490 1,315 202 6.5 $848 2,392 1,816 $592 22.6% 10.6% $36

2012 $513 1,443 189 7.6 $742 2,145 1,750 $487 18.3% 10.0% ($8)

% Change -4% -9% 7% -14% 14% 12% 4% 22% +430 bps +60 bps

1) Net Contracts ($ value)1 2) Net Contracts (units)1 3) Communities1 4) Contracts per Community1 5) Backlog ($ value)1 6) Backlog (units)1 7) Deliveries1 8) Total Revenues 9) Homebuilding Gross Margin 10) Total SG&A as a Percentage of Total Revenues Income (Loss) Before Income Taxes Excluding Land11) Related Charges, Expenses Associated with the Debt Exchange Offer and Gain on Extinguishment of Debt (2)

(1) Includes unconsolidated joint ventures. (2) Includes inventory impairment loss and lot option write-offs, as well as unconsolidated joint venture investment and land-related charges.

24

Land Positions by Geographic Segment

October 31, 2013 Years Supply Owned Excluding Mothballed Lots 1.8 3.8 3.8 1.6 1.0 1.4 1.9 Investment in Land (raw land, finished lots and lots under development) ($ in millions) $184 $93 $47 $38 $113 $80 $555

Segment Northeast Mid-Atlantic Midwest Southeast Southwest West Total

TTM Deliveries 617 623 657 535 2,331 503 5,266

Mothballed Lots 1.6 0.4 0.2 0.9 0.0 9.1 1.2

Optioned 4.3 4.8 3.0 4.6 2.0 1.5 2.9

Total 7.7 9.0 6.9 7.2 3.0 12.0 6.0

Excluding unconsolidated joint ventures.

25

Unsold Homes per Community

633 started unsold homes at 10/31/13, excluding models 4.7 average started unsold homes per community since 1997 As of October 31, 2013, 3.3 started unsold homes per community 9.0

# Homes / Community

6.0

3.0

0.0

Excluding unconsolidated joint ventures.

Oct-97 Apr-98 Oct-98 Apr-99 Oct-99 Apr-00 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13
Started Unsold Homes Models
26

Owned Lots % Development Costs Spent

As of October 31, 2013

54% 38%

8%
>80% developed 30% - 80% developed <30% developed

Excluding unconsolidated joint ventures.

27

$ in Millions

Oct-08
$727 $643 $500 $468 $394 $362 $385 $356 $336 $353 $345 $360 $576 $570 $503 $357 $374 $381

$1,134 $1,020 $776 $686 $559 $562 $586 $560 $521 $522 $561 $628

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12

$469 $464

$413 $370 $369 $418

Excluding Inventory Not Owned, on-your-lot construction, assets outside the US and option deposits and pre-development costs.

Land (raw land, finished lots and land under developm ent)

Jan-13 $495 Apr-13 $447 Jul-13 13-Oct

28

$504 $555

$436 $338

Inventory Breakdown

Sold and Unsold hom es (including land, land developm ent and WIP)

Payments for Loan Repurchases and Make Whole Requests

As of October 31, 2013
$ in millions

13 of 18 loans were small second lien repurchases.

$2.6 $1.6 $1.5 $1.0

$1.6

$0.7 FY 2012
10 loans

FY 2008
Settlements 28 loans

FY 2009
28 loans 41 loans

FY 2010
17 loans 98 loans

FY 2011
29 loans 39 loans

FY 2013
18 loans
58 loans

Repurchase Inquires 45 loans

66 loans

As of October 31, 2013, reserve for loan repurchases and make whole requests was $11.0 million.
Note: All of these losses had been adequately reserved for in prior periods.

29

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