HOVNANIAN ENTERPRISES INC
10-K, 1998-01-13
OPERATIVE BUILDERS
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-K

( X )ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 (FEE REQUIRED)

      For the twelve months ended OCTOBER 31, 1997

(    )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

Commission file number:  1-8551

Hovnanian Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Delaware                                           22-1851059
(State or other jurisdiction of                   (I.R.S. Employer incorporation
or organization)                                   Identification No.)

10 Highway 35, P.O. Box 500, Red Bank, N.J.  07701
(Address of principal executive offices)

732-747-7800
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

                                              Name of Each Exchange on
Title of Each Class                           Which Registered
- --------------------                          ------------------------
Class A Common Stock, $.01 par value          American Stock Exchange
 per share

Securities registered pursuant to Section 12(g) of the Act  -  None

Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.       ( X )Yes (   ) No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

As of the close of business on January 2, 1998, there were outstanding
14,077,622 shares of the Registrant's Class A Common Stock and 7,745,631 shares
of its Class B Common Stock.  The approximate aggregate market value (based
upon the closing price on the American Stock Exchange) of these shares held by
non- affiliates of the Registrant as of January 2, 1998 was $61,159,000.
(The value of a share of Class A Common Stock is used as the value for a
share of Class B Common Stock as there is no established market for Class B
Common Stock and it is convertible into Class A Common Stock on a share-for-
share basis.)

Documents Incorporated by Reference:

Part III - Those portions of registrant's definitive proxy statement to be filed
pursuant to Regulation l4A in connection with registrant's annual meeting of
shareholders to be held on April 14, 1998 which are responsive to Items l0, ll,
l2 and l3.

HOVNANIAN ENTERPRISES, INC.
FORM 10-K
TABLE OF CONTENTS

Item                                                       Page

PART I

1 and 2        Business and Properties......................   4
   3           Legal Proceedings............................  16
   4           Submission of Matters to a Vote of
                 Security Holders...........................  16
               Executive Officers of the Registrant.........  16
PART II

   5           Market for the Registrant's Common Equity
                 and Related Stockholder Matters............  17

   6           Selected Financial Data......................  18

   7           Management's Discussion and Analysis of
                 Financial Condition and Results of
                 Operations.................................  19

   8           Financial Statements and Supplementary
                 Data.......................................  33
   9           Changes in and Disagreements with
                 Accountants on Accounting and Financial
                 Disclosure.................................  33

PART III

  10           Directors and Executive Officers of the
                 Registrant.................................  34

               Executive Officers of the Registrant.........  34

  11           Executive Compensation.......................  35

  12           Security Ownership of Certain Beneficial
                 Owners and Management......................  35

  13           Certain Relationships and Related
                 Transactions...............................  35

PART IV

  14           Exhibits, Financial Statement Schedules and
                  Reports on Form 8-K.......................  36

               SIGNATURES...................................  39

PART I

ITEMS 1 AND 2 - BUSINESS AND PROPERTIES

     The Company primarily designs, constructs and markets multi-family attached
condominium apartments and townhouses and single family detached homes in
planned residential developments in its Northeast Region (comprised primarily of
New Jersey, southern New York state, and eastern Pennsylvania), southeastern
Florida, North Carolina, Metro Washington, D. C. (northern Virginia), southern
California, and Poland.  Operations in Poland began for the first time during
the year ended October 31, 1996, but deliveries did not occur until the year
ended October 31, 1997.  The Company markets its homes to first time buyers,
to first and second time move-up buyers, and to active adult buyers and
concentrates on the moderately priced segment of the housing market.  The
Company has diversified its business, on a limited scale, through mortgage
banking and title insurance activities.  In addition, the Company had developed
and operates commercial properties as long-term investments in New Jersey and,
to a lesser extent, Florida but is exiting this business (see "Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations").

     The Company employed approximately 1,150 full-time associates as of October
31, 1997.  The Company was incorporated in New Jersey in 1967 and was
reincorporated in Delaware in 1982.


RESIDENTIAL DEVELOPMENT ACTIVITIES

     The Company's residential development activities include evaluating and
purchasing properties, master planning, obtaining governmental approvals and
constructing, marketing and selling homes.  A residential development generally
includes a number of residential buildings containing from two to twenty-four
individual homes per building and/or single family detached homes, together with
amenities such as recreational buildings, swimming pools, tennis courts and open
areas.  By using standardized designs and materials and by rigorous control of
subcontracting costs, the Company attempts to keep selling prices moderate.

     The Company attempts to reduce the effect of certain risks inherent in the
housing industry through the following policies and procedures:

      - The Company acquires land for future development principally through the
     use of land options which need not be exercised before the completion of
     the regulatory approval process.  The Company structures these options in
     most cases with flexible takedown schedules rather than with an obligation
     to takedown the entire parcel upon approval.  Additionally, the Company
     purchases improved lots in certain markets by acquiring a small number of
     improved lots with an option on additional lots.  This allows the Company
     to minimize the economic costs and risks of carrying a large land
     inventory, while maintaining its ability to commence new developments
     during favorable market periods.
     
      - In an attempt to reduce its land acquisition costs, the Company monitors
     housing industry cycles and seeks to acquire land options near the cyclical
     trough of specific geographic housing cycles.
     
      - The Company generally begins construction on a residential multi-family
     building only after entering into contracts for the sale of at least 75% of
     the homes in that building.  Single family detached homes are generally
     started after a contract is signed and mortgage approvals obtained.  This
     limits the build-up of inventory of unsold homes and the costs of
     maintaining and carrying that inventory.
     
      - The Company finances all construction, land acquisition and operations
     through equity, long term debt, its unsecured revolving credit facility or
     cash flow.  This eliminates the need of obtaining specific community
     construction financing, which is especially important at a time when
     obtaining such community financing is difficult.
     
      - Through its presence in multiple geographic markets, the Company's goal
     is to reduce the effects that housing industry cycles, seasonality and
     local conditions in any one area may have on its business.  In addition,
     the Company plans to eventually be a market leader in all its markets in
     order to obtain economies of scale.
     
      - The Company looks to diversify its product line to provide affordable
     housing to a broad range of customers.  Currently the Company's customers
     consist of first-time buyers, first and second time move-up buyers, move
     down buyers and active adult buyers.
     
      - The Company offers a wide range of customer options to satisfy
     individual customer tastes.  In its larger communities the Company has
     constructed decoration centers where the customer can better see
     customization possibilities for their new home.
     
      - Through operational excellence the Company attempts to reduce its
     housing construction costs.  Operational excellence is further discussed
     under "Certain Operating Policies and Procedures" below.
     
     The Company concentrates on a segment of the housing market consisting of
moderately priced, multi-family attached condominium apartments and townhouses,
which are marketed primarily to first time buyers, as well as moderately priced
townhouses with garages and single family detached homes, which are marketed
primarily to first and second time move-up buyers and to active adult buyers.
In recent years, the Company has diversified its product mix to include more
detached single family homes and larger townhouses with garages designed for the
move-up buyer and age restricted communities for active adults.  Current base
prices for the Company's homes in contract backlog at October 31, 1997
(exclusive of upgrades and options) range from $34,000 to $550,000 in its
Northeast Region, from $105,000 to $337,000 in Florida, from $99,000 to
$351,000 in North Carolina, from $167,000 to $325,000 in Metro Washington,
D. C., from $110,000 to $285,000 in California, and from $73,000 to $87,000
in Poland.  Closings generally occur and are reflected in revenues from four
to twelve months after sales contracts are signed.
    
     Information on homes delivered by market area is set forth below:

                                      Year Ended
                          ---------------------------------
                          October      October     October
                          31, 1997     31, 1996    31, 1995
                          ---------    --------    --------
                            (Housing Revenue in Thousands)

Northeast Region:
  Housing Revenues........ $445,817    $460,931    $492,388
  Homes Delivered.........    2,128       2,364       2,707
  Average Price........... $209,500    $194,979    $181,894

North Carolina:
  Housing Revenues........ $125,242    $123,347    $115,919
  Homes Delivered.........      695         738         718
  Average Price........... $180,204    $167,137    $161,447

Florida:
  Housing Revenues........ $ 74,146    $ 99,085    $ 67,272
  Homes Delivered.........      418         632         451
  Average Price........... $177,382    $156,780    $149,162

Metro Washington D.C.:
  Housing Revenues........ $ 14,398    $ 16,749    $ 36,006
  Homes Delivered.........       70          75         186
  Average Price........... $205,685    $223,320    $193,581

California:
  Housing Revenues........ $ 69,252    $ 64,570    $ 27,707
  Homes Delivered.........      365         325         149
  Average Price........... $189,731    $198,677    $185,953

Poland(97) and Other(95):
  Housing Revenues........ $  2,952          --    $  1,189
  Homes Delivered.........       41          --          33
  Average Price........... $ 72,000          --    $ 36,030

Combined Total:
  Housing Revenues........ $731,807    $764,682    $740,481
  Homes Delivered.........    3,717       4,134       4,244
  Average Price........... $196,881    $184,974    $174,477

     Information on homes delivered by product type is set forth below:

                                         Year Ended
                                -----------------------------
                                October    October   October
                                31, 1997   31, 1996  31, 1995
                                --------   --------  --------
                               (Housing Revenues in Thousands)

First Time Buyer Product(1)
  Housing Revenues............. $ 52,589   $ 77,682  $108,052
  Homes Delivered..............      407        619       878
  Percentage of Housing
   Revenues....................       7%        10%       15%

Move-Up Buyer Product(2)
  Housing Revenues............. $679,218   $687,000  $632,429
  Homes Delivered..............    3,310      3,515     3,366
  Percentage of Housing
   Revenues....................      93%        90%       85%

(1) First time buyer product consists of all of the Company's
    multi-family attached home products other than townhouses with
    garages.
(2) Move-up buyer product consists of single family detached homes and
    townhouses with garages.

     The Company's net sales contracts increased to $762,750,000 for the year
ended October 31, 1997 from $738,331,000 for the year ended October 31, 1996 or
3.3%, and was the net result of a 2.4% decrease in the number of homes
contracted to 4,073 in 1997 from 4,175 in 1996 and a 5.9% increase in the
average home base sales prices.  On a market area and dollar basis, California
achieved the highest increase of 45.3%, followed by Metro Washington D.C. with a
30.1% increase, the Northeast Region with a 5.0% increase and North Carolina
with a 3.3% increase.  Only Florida had a decrease due to the downsizing of the
division.

     During the year ended October 31, 1997 the Company has written down
certain residential communities, and written off certain residential land
options including approval, engineering and capitalized interest costs.  In
Florida the Company's return on investment has been unsatisfactory.  As a
result, the Company established a goal to reduce its investment in Florida by
$25.0 million. To do so on an accelerated basis, it reduced prices and
offered pricing concessions in most Florida residential communities.  The
Company also decided to sell all inactive properties in Florida.  In the
Northeast Region the Company changed the product type to be constructed on a
parcel of land it owns.  In an active community in the Northeast Region, the
Company incurred unforeseen development costs.  Also in the Northeast the
Company decided to sell an optioned property instead of developing it.  As a
result, such inventories were written down in the aggregate $9,258,000 during
the year ended October 31, 1997.  Also in the Northeast Region three optioned
properties and related approval, engineering and capitalized interest costs
amounting to $4,761,000 were written off.  Total writedowns and write-offs of
residential inventories are presented on the consolidated statement of income
as "Inventory impairment loss."  See "Notes to Consolidated Financial
Statements - Note 10" for additional explanation.

     As of October 31, 1997, the following table summarizes the Company's active
communities under development:
                                                         (1)        (2)
                                                  Contracted   Remaining
                     Commun-  Approved    Homes      Not       Home Sites
                      ities     Lots    Delivered  Delivered   Available
                     -------  --------  ---------  ---------   ----------

  Northeast Region......    37      9,701     2,700       1,268       5,733
  North Carolina........    34      3,035     1,242         225       1,568
  Florida...............     6      1,943     1,359         150         434
  Metro Washington D.C..     4        359        49          27         283
  California............     6      1,107       426         137         544
  Poland................     1        107        41          39          27
                         -------  --------  ---------  ---------   ----------
     Total                 88     16,252     5,817       1,846       8,589
                         =======  ========  =========  =========   ==========

(1)  Includes 24 lots under option.

(2)  Of the total home sites available, 579 were under construction or
     completed (including 101 models and sales offices), 3,968 were under
     option, and 762 were financed through purchase money mortgages.

     In addition, in substantially completed or suspended developments, the
Company had 43 homes under construction or completed including 25 homes which
are under contract and 1 model.  The Company also had 211 lots without
construction (1 under contract) in these substantially completed or suspended
developments.

     As of October 31, 1997, the following table summarizes the Company's
started or completed unsold homes:

                                   Unsold
                                   Homes        Models      Total
                                   ------       ------      -----

Northeast Region..................   279           63         342
North Carolina....................    83           --          83
Florida...........................    47           11          58
Metro Washington D.C..............    16           10          26
California........................    60           16          76
Poland............................    10            2          12
                                   ------       ------      -----
     Total                           495          102         597
                                   ======       ======      =====

BACKLOG

     Sales of the Company's United States residential homes typically are made
pursuant to a standard sales contract.  This contract requires a nominal
customer deposit at the time of signing with the remainder of a 5% to 10% down
payment due 30 to 60 days after signing and provides the customer with a
statutorily mandated right of rescission for a period ranging up to 15 days
after execution.  The contract may include a financing contingency, which
permits the customer to cancel his obligation in the event mortgage financing at
prevailing interest rates (including financing arranged or provided by the
Company) is unobtainable within the period specified in the contract.  This
contingency period typically is four to eight weeks following the date of
execution.

     At October 31, 1997 and October 31, 1996, the Company had a backlog of
signed contracts for 1,872 homes and 1,516 homes, respectively, with sales
values aggregating $374,314,000 and $292,376,000, respectively.  Substantially
all of the Company's backlog at October 31, 1997 is expected to be completed and
closed within the next twelve months.  At December 31, 1997 and 1996, the
Company's backlog of signed contracts was 1,779 homes and 1,685 homes,
respectively, with sales values aggregating $360,969,000 and $326,795,000,
respectively.


RESIDENTIAL LAND INVENTORY

     It is the Company's objective to control a supply of land, primarily
through options, consistent with anticipated homebuilding requirements in its
housing markets.  Controlled land as of October 31, 1997, exclusive of
communities under development described under "Business and Properties --
Residential Development Activities,"  is summarized in the following table:

                     Number
                      of        Proposed    Total Land
                    Proposed   Developable    Option         Book
                   Communities     Lots        Price        Value(1)(2)
                   -----------  -----------  -----------    -----------
                                                    (In Thousands)
Northeast Region:
  Under Option........       27       7,371      $123,734        $ 20,628
  Owned...............        6         451                        17,534
                        --------   -----------                 -----------
     Total............       33       7,822                        38,162
                        --------   -----------                 -----------
North Carolina:
  Under Option........        4         296      $  7,404              23
  Owned...............        1          80                           409
                        --------   -----------                 -----------
     Total............        5         376                           432
                        --------   -----------                 -----------
Florida:
  Under Option........        1         131      $  4,788             232
  Owned...............        3       1,038                         4,059
                        --------   -----------                 -----------
     Total............        4       1,169                         4,291
                        --------   -----------                 -----------
Metro Washington, D.C.:
  Under Option........        1           38     $    855             139
                        --------   -----------                 -----------
California:
  Under Option........        4          331     $ 21,927           3,681
                        --------   -----------                 -----------
Totals:
  Under Option........       37        8,167                       24,703
  Owned...............       10        1,569                       22,002
                        --------   -----------                 -----------
Combined Total........       47        9,736                     $ 46,705
                        ========   ===========                 ===========

(1)  Properties under option also includes costs incurred on properties not
under option but which are under investigation.  For properties under option,
the Company paid, as of October 31, 1997, option fees and deposits aggregating
approximately $7,987,000.  As of October 31, 1997, the Company spent an
additional $16,716,000 in non-refundable predevelopment costs on such
properties.

(2)  The book value of $46,705,000 plus Poland investigation costs of $96,000
on one parcel of land, totals $46,801,000 which is identified on the balance
sheet as "Inventories - land, land options, and cost of projects in planning."

     In its Northeast Region, the Company's objective is to control a supply of
land sufficient to meet anticipated building requirements for at least three to
five years.

     In North Carolina and Metro Washington, D.C., some land historically has
been acquired from land developers on a lot takedown basis.  Under a typical
agreement with the lot developer, the Company purchases a minimal number of
lots.  The balance of the lots to be purchased are covered under an option
agreement or a non-recourse purchase agreement.  Due to the dwindling supply of
improved lots in North Carolina and Metro Washington, D.C., the Company is
currently optioning parcels of unimproved land for development.

     In Florida, the Company is focusing its development efforts primarily in
the southeast.  Emphasis is principally on building single family detached
homes.   As a result of its decision to downsize, the Company is attempting to
sell all its land in other locations, including the parcels of owned land
included in the table on the previous page.

     In California, the Company has focused its development efforts in the
southern region.  Here the emphasis is on affordable housing and will consist
of single family attached and detached homes.  Where possible, the Company
plans to option developed or partially developed lots with no more than
fifty to seventy-five lots to be taken down during any twelve month period. 
With a dwindling supply in California of developed lots, some land parcels
will be optioned which will require the full range of development activities.
Option fees range up to 10% of the land value.


CUSTOMER FINANCING

     At the Company's communities, on-site personnel facilitate sales by
offering to arrange financing for prospective customers through K. Hovnanian
Mortgage, Inc. ("KHM").  Management believes that the ability to offer 
financing to customers on competitive terms as a part of the sales process
is an important factor in completing sales.

     KHM's business consists of providing the Company's customers with
competitive financing and coordinating and expediting the loan origination
transaction through the steps of loan application, loan approval and closing.
KHM has its headquarters in Red Bank, New Jersey and operates origination
offices in Raleigh, Charlotte and Winston-Salem, North Carolina, West Palm
Beach, Florida and Newport Beach, California.  Additionally, KHM originates
loans in Pennsylvania and New York.

     KHM's principal sources of revenues are: (i) net gains from the sale of
loans; (ii) revenues from the sale of the rights to service loans; and (iii)
interest income earned on mortgage loans during the period they are held by
KHM prior to their sale to investors.

     KHM is approved by the Government National Mortgage Association ("GNMA") as
a seller-servicer of Federal Housing Administration ("FHA") and Veterans
Administration ("VA") loans.  A portion of the conventional loans originated by
KHM (i.e., loans other than those insured by FHA or guaranteed by VA) qualify
for inclusion in loan guarantee programs sponsored by the Federal National
Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation
("FHLMC").  KHM also originates conventional loans which are sold to a number of
private investors.  KHM arranges for fixed and adjustable rate, conventional,
privately insured mortgages, FHA-insured or VA-guaranteed mortgages, and
mortgages funded by revenue bond programs of states and municipalities.

     KHM is a delegated underwriter under the FHA Direct Endorsement and VA
Automatic programs in accordance with criteria established by such agencies.
Additionally, KHM has delegated underwriting authority from FNMA and FHLMC.
As a delegated underwriter, KHM may underwrite and close mortgage loans under
programs sponsored by these agencies without their prior approval, which
expedites the loan origination process.

     KHM, like other mortgage bankers, customarily sells nearly all of the loans
that it originates.  Loans are sold either individually or in pools to GNMA,
FNMA, or FHLMC or against forward commitments to institutional investors,
including banks and savings and loan associations.

     KHM plans to grow its mortgage banking operations.  Initially, KHM focused
on originating loans from customers who purchase homes from Hovnanian
Enterprises, Inc. affiliates.  KHM's objective is to increase the capture rate
of these customers from the 42% rate achieved in fiscal 1997 to 60% over the
next several years.  Additionally it has reduced the time to approve a loan to
under five days.  KHM believes it now offers superior mortgage products and
services and is exploring methods to offer its mortgage products and services to
unrelated third parties.  These methods include direct mailings, telemarketing
activities and the solicitation of real estate and mortgage brokers.


RENTAL PROPERTY DEVELOPMENT ACTIVITIES AND LAND INVENTORY

     The Company had previously diversified its business, on a limited scale,
through the development, acquisition and ownership of commercial properties,
primarily in central New Jersey, and, to a lesser extent, in Florida, but is
exiting this business (see "Item 7 - Management's Dicsussion and Analysis of
Financial Condition and Results of Operations").


CERTAIN OPERATING POLICIES AND PROCEDURES

     Financial Goals.  The Company has been focusing on housing margin
improvement and de-emphasizing revenue growth.  Housing revenues rose from $566
million during the year ended February 28, 1994 to $783 million for the year
ended October 31, 1996, but dropped off to $759 million for the year ended
October 31, 1997.  During this time, housing margins have decreased from 18.0%
in 1994 to 15.6% in 1997.  To improve its housing margin, the Company is
focusing on reducing overheads, increasing associate productivity and reducing
construction costs by decreasing construction cycle times and using national
and regional contracts.  Also the Company has consolidated its vendor base and
centralized purchasing functions in the Northeast Region which, when
implemented in all of the Northeast Region's communities, is projected to
result in increased housing margins.

     Strategic Initiatives.  In order to help improve housing margins the
Company previously introduced three strategic initiatives.  These initiatives
are Partners In Excellence, Process Redesign, and Training.

     Partners In Excellence (the Company's total quality management initiative)
is intended to focus on improving the way operations are performed.  It
involves all Company associates through a systematic, team-oriented approach
to improvement.  It increases the Company's profits by streamlining
processes and by reducing errors which cost money.  The Company was
recognized for its efforts by receiving the 1997 gold National Housing
Quality Award from Professional Builder and The NAHB Research Center.

     Process Redesign is a fundamental rethinking and radical redesign of our
processes to achieve dramatic improvements in performance.  The Company's
Process Redesign efforts are currently focused on two areas:  financial
planning and reporting and home construction.  The financial planning and
reporting team is intended to integrate systems and provide flexible and
easy access to data from all operating areas in the Company.  The home
construction team is analyzing the entire production process.  It is working
to improve estimating, bidding, contracting, budgeting, scheduling,
work/materials ordering, receiving, inspecting, and payment processing.

     Training is designed to provide our associates with the knowledge,
attitudes, skill and habits necessary to succeed at their jobs.  The Company's
Training Department regularly conducts training classes in sales, construction,
administrative, and managerial areas.  In addition, as Process Redesign
develops new systems, the Training Department is responsible for educating
the Company's associates on the systems, procedures, and operations.

     Land Acquisition, Planning and Development.  Before entering into a
contract to acquire land, the Company completes extensive comparative studies
and analyses which assist the Company in evaluating the economic feasibility of
such land acquisition.  The Company generally follows a policy of acquiring
options to purchase land for future community developments.  The Company
attempts to acquire land with a minimum cash investment and negotiate takedown
options, thereby limiting the financial exposure to the amounts invested in
property and predevelopment costs.  This policy of land acquisition may
somewhat raise the price of land that the Company acquires, but significantly
reduces risk.  Further, this policy generally allows the Company to obtain
necessary development approvals before acquisition of the land, thereby
enhancing the value of the options and the land eventually acquired.

     The Company's option and purchase agreements are typically subject to
numerous conditions, including, but not limited to, the Company's ability to
obtain necessary governmental approvals for the proposed community.  Generally,
the deposit on the agreement will be returned to the Company if all approvals
are not obtained, although predevelopment costs may not be recoverable.  By
paying an additional, nonrefundable deposit, the Company has the right to
extend a significant number of its options for varying periods of time.  In all
instances, the Company has the right to cancel any of its land option agreements
by forfeiture of the Company's deposit on the agreement.  In such instances,
the Company generally is not able to recover any predevelopment costs.

     The Company's development activities include site planning and engineering,
obtaining environmental and other regulatory approvals and constructing roads,
sewer, water and drainage facilities, and for the Company's residential
developments, recreational facilities and other amenities.  These activities
are performed by the Company's staff, together with independent architects,
consultants and contractors.  The Company's staff also carries out long-term
planning of communities.

     Design.  The Company's residential communities are generally located in
suburban areas near major highways.  The communities are designed as
neighborhoods that fit existing land characteristics.  The Company strives to
create diversity within the overall planned community by offering a mix of homes
with differing architecture, textures and colors.  Wherever possible,
recreational amenities such as a swimming pool, tennis courts and tot lots are
included.

     Construction.  The Company designs and supervises the development and
building of its communities.  Its homes are constructed according to
standardized prototypes which are designed and engineered to provide innovative
product design while attempting to minimize costs of construction.  The Company
employs subcontractors for the installation of site improvements and
construction of homes.  Agreements with subcontractors are generally short term
and provide for a fixed price for labor and materials.  The Company rigorously
controls costs through the use of a computerized monitoring system.  Because of
the risks involved in speculative building, the Company's general policy is to
construct a residential multi-family building only after signing contracts for
the sale of at least 75% of the homes in that building.  Single family detached
homes are usually constructed after the signing of a contract and mortgage
approval has been obtained.

     Materials and Subcontractors.  The Company attempts to maintain efficient
operations by utilizing standardized materials available from a variety of
sources.  In addition, the Company contracts with subcontractors representing
all building trades in connection with the construction of its homes.  In
recent years, the Company has experienced no material construction delays due
to shortages of materials or labor.  The Company cannot predict, however, the
extent to which shortages in necessary materials or labor may occur in the
future.

     Marketing and Sales.  The Company's residential communities are sold
principally through on-site sales offices.  In order to respond to its
customers' needs and trends in housing design, the Company relies upon its
internal market research group to analyze information gathered from, among
other sources, buyer profiles, exit interviews at model sites, focus groups
and demographic data bases.  The Company makes use of newspaper, radio,
magazine, billboard, video and direct mail advertising, special promotional
events, illustrated brochures, full-sized and scale model homes in its
comprehensive marketing program.  For the year ended October 31, 1997, the
Company's advertising expenditures totaled $12,559,000.

     Customer Service and Quality Control.  The Company's associates responsible
for customer service participate in pre-closing quality control inspection as
well as responding to post-closing customer needs.  Prior to closing, each home
is inspected and any necessary completion work is undertaken by the Company.  In
some of its markets the Company is also enrolled in a standard limited warranty
program which, in general, provides a homebuyer with a one-year warranty for
the home's materials and workmanship, a two-year warranty for the home's
heating, cooling, ventilating, electrical and plumbing systems and a ten-year
warranty for major structural defects.  All of the warranties contain standard
exceptions, including, but not limited to, damage caused by the customer.

     Customer Financing.  The Company sells its homes to customers who generally
finance their purchases through mortgages.  During the year ended October 31,
1997, approximately 42% of the Company's customers obtained mortgages originated
by the Company's wholly-owned mortgage banking subsidiary, with a substantial
portion of the Company's remaining customers obtaining mortgages from various
independent lending institutions.  Mortgages originated by the Company's wholly-
owned mortgage banking subsidiary are sold in the secondary market.

     Financing arrangements with independent lending institutions are at
prevailing rates and on terms in accordance with the lending institutions
policies.  Mortgages offered by the Company's subsidiary are on terms similar to
those offered by independent lending institutions.  There are no assurances that
mortgage financing will remain readily available to the Company's customers at
affordable rates.

COMPETITION

     The Company's residential business is highly competitive.  The Company
competes in each of the geographic areas in which it operates with numerous
real estate developers, ranging from small local builders to larger regional
and national builders and developers, some of which have greater sales and
financial resources than the Company.  Resales of housing and the
availability of rental housing provide additional competition.  The Company
competes primarily on the basis of reputation, price, location, design, quality,
service and amenities.


REGULATION AND ENVIRONMENTAL MATTERS

     General.  The Company is subject to various local, state and federal
statutes, ordinances, rules and regulations concerning zoning, building design,
construction and similar matters, including local regulations which impose
restrictive zoning and density requirements in order to limit the number of
homes that can eventually be built within the boundaries of a particular
locality.  In addition, the Company is subject to registration and filing
requirements in connection with the construction, advertisement and sale of its
communities in certain states and localities in which it operates even if all
necessary government approvals have been obtained.  The Company may also be
subject to periodic delays or may be precluded entirely from developing
communities due to building moratoriums that could be implemented in the future
in the states in which it operates.  Generally, such moratoriums relate to
insufficient water or sewerage facilities or inadequate road capacity.

     Environmental.  The Company is also subject to a variety of local, state
and federal statutes, ordinances, rules and regulations concerning protection
of health and the environment ("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.  These environmental laws may result in delays, may
cause the Company to incur substantial compliance and other costs, and prohibit
or severely restrict development in certain environmentally sensitive regions or
areas.

     The Florida Growth Management Act of 1985 became fully effective in Palm
Beach County on February 1, 1990.  The act requires that infrastructure,
including roads, sewer and water lines must be in existence concurrently with
the construction of the development.  If such infrastructure is not concurrently
available, then the community cannot be developed.  This will have an effect on
limiting the amount of land available for development and may delay approvals of
some developments.

     Fair Housing Act.  In July 1985, New Jersey adopted the Fair Housing Act
which established an administrative agency to adopt criteria by which
municipalities will determine and provide for their fair share of low and
moderate income housing.  This agency adopted such criteria in May 1986.  Its
implementation thus far has caused some delay in approvals for some of the
Company's New Jersey communities and may result in a reduction in the number
of homes planned for some properties.

     Both prior to the enactment of the Fair Housing Act and in its
implementation thus far, municipal approvals in some of the New Jersey
municipalities in which the Company owns land or land options required the
Company to set aside up to 22% of the approved homes for sale at prices
affordable to persons of low and moderate income.  In order to comply with
such requirements, the Company must sell these homes at a loss.  The Company
attempts to reduce some of these losses through increased density, certain
cost saving construction measures and reduced land prices from the sellers
of property. Such losses are absorbed by the market priced homes in the same
developments.

     State Planning Act.  Pursuant to the 1985 State Planning Act, the New
Jersey State Planning Commission has adopted a State Development and
Redevelopment Plan ("State Plan").  The State Plan, if fully implemented, would
designate large portions of the state as unavailable for development or as
available for development only at low densities, and other portions of the
state for more intense development.  State government agencies would be
required to make permitting decisions in accordance with the State Plan, if
it is fully implemented. The state government agencies have not yet adopted
policies and regulations to fully implement the State Plan.  However, at least
one state agency has issued an Executive Order requiring compliance with the
State Plan.  It is unclear what effect this Executive Order may have on the
Company's ability to develop its lands.

     Conclusion.  Despite the Company's past ability to obtain necessary
permits and approvals for its communities, it can be anticipated that
increasingly stringent requirements will be imposed on developers and
homebuilders in the future.  Although the Company cannot predict the effect of
these requirements, they could result in time-consuming and expensive compliance
programs and substantial expenditures for pollution and water quality control,
which could have a material adverse effect on the Company.  In addition, the
continued effectiveness of permits already granted or approvals already
obtained is dependent upon many factors, some of which are beyond the Company's
control, such as changes in policies, rules and regulations and their
interpretation and application.

     Company Offices.  The Company owns its corporate headquarters, a four-
story, 24,000 square feet office building located in Red Bank, New Jersey, a
17,450 square feet office building located in Winston-Salem, North Carolina,
and 17,225 square feet in a Middletown, New Jersey condominium office building.
The Company leases office space consisting of 38,600 square feet in various New
Jersey locations, 8,400 square feet in Fairfax, Virginia, 13,000 square feet in
various North Carolina locations, 15,900 square feet in West Palm Beach,
Florida, and 8,100 square feet in southern California.

ITEM 3 - LEGAL PROCEEDINGS

     During fiscal 1989, the Company became aware that a certain fire-retardant
plywood commonly used in the roof construction of multi-family homes may
contain a product defect causing accelerated deterioration of the plywood.
The Company has determined that such plywood was used principally in 33 of
its communities containing approximately 11,750 homes.

     Common areas, including roofs, in each of the Company's multi-family
condominium developments are governed and controlled by homeowners' associations
for each development, rather than by individual homeowners.  Certain of the 33
homeowners' associations in the affected developments have asserted claims
against the Company.  As of October 31, 1995, the Company had entered separate
agreements with all 33 associations (the "Settling Associations").

     In August 1989 the Company brought suit in an action entitled K. Hovnanian
at Bernards I, Inc., et al. v. Hoover Treated Wood Products, Inc., et al. (No.
L-11822-89) in the Superior Court, Law Division, Middlesex County, New Jersey
against the plywood material manufacturers, treaters, suppliers and others (the
"Defendants") to determine the proper responsibility for damages, to protect
its interests and to recover its damages.

     In November 1992 the Company and the Settling Associations entered into a
settlement agreement with most of the Defendants.  Based upon the settlement
monies received, the use of the Settling Associations' roof shingle reserves,
and the actual expenditures in performing the repairs, the Company believes the
repair costs will not require it to set aside future reserves for such roof
repairs.  Currently the Company believes there is no additional liability
relating to fire-retardant plywood.

     In addition, the Company is involved from time to time in litigation
arising in the ordinary course of business, none of which is expected to have a
material adverse effect on the Company.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     During the fourth quarter of the year ended October 31, 1997 no matters
were submitted to a vote of security holders.

EXECUTIVE OFFICERS OF THE REGISTRANT

     Information on executive officers of the registrant is incorporated herein
from Part III, Item 10.

PART II

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDERS MATTERS

     The number of shares and all data presented on a per share basis in this
Form 10-K have been adjusted to give effect to all stock splits.  The Company's
Class A Common Stock is traded on the American Stock Exchange and was held by
approximately 930 shareholders of record at January 2, 1998.  There is no
established public trading market for the Company's Class B Common Stock, which
was held by approximately 750 shareholders of record at January 2, 1998.  In
order to trade Class B Common Stock, the shares must be converted into Class A
Common Stock on a one-for-one basis.  The high and low sales prices for the
Company's Class A Common Stock were as follows for each fiscal quarter during
the years ended October 31, 1997, 1996, and 1995:

                             Class A Common Stock
               ------------------------------------------------
               Oct. 31, 1997    Oct. 31, 1996    Oct. 31, 1995
               --------------   --------------   --------------
Quarter         High    Low      High    Low      High    Low
- -------        ------  ------   ------  ------   ------  ------
First........   $7.63   $5.63    $7.75   $6.25    $6.25   $4.75
Second.......   $7.00   $6.25    $8.25   $6.25    $6.50   $5.00
Third........   $7.13   $5.69    $7.25   $5.06    $7.13   $5.25
Fourth.......   $8.13   $6.75    $6.63   $5.50    $8.25   $5.31

     Certain debt instruments to which the Company is a party contain
restrictions on the payment of cash dividends.  As a result of the most
restrictive of these provisions, approximately $41,578,000 was free of such
restrictions at October 31, 1997.  The Company has never paid dividends nor
does it currently intend to pay dividends.

ITEM 6 - SELECTED CONSOLIDATED FINANCIAL DATA

     The following table sets forth selected financial data for the Company and
its consolidated subsidiaries and should be read in conjunction with the
financial statements included elsewhere in this Form 10-K.  Per common share
data and weighted average number of common shares outstanding reflect all 
stock splits.


<TABLE>
<CAPTION>
                                                               Eight
                                         Year Ended            Months  Year Ended
                                ----------------------------   Ended   ---------
Summary Consolidated            October   October   October   October   February  February
Income Statement Data           31, 1997  31, 1996  31, 1995  31, 1994  28, 1994  28, 1993
- ------------------------------- --------  --------  --------  --------  --------  --------
                                    (In Thousands Except Per Share Data)
<S>                             <C>       <C>       <C>       <C>       <C>       <C> 
Revenues....................... $784,136  $807,464  $777,745  $386,585  $587,010  $429,315
Expenses.......................  796,260   782,458   756,091   402,090   557,859   414,790
                                --------  --------  --------  --------  --------  --------
Income(loss) before income
  taxes and extraordinary loss.  (12,124)   25,006    21,654   (15,505)   29,151    14,525
State and Federal income taxes.   (5,154)    7,719     7,526    (5,075)    9,229     4,735
Extraordinary loss.............       --        --        --        --    (1,277)       --
                                --------  --------  --------  --------  --------  --------
Net income (loss).............. $ (6,970) $ 17,287  $ 14,128  $(10,430) $ 18,645  $  9,790
                                ========  ========  ========  ========  ========  ========

Earnings per common share:
  Income (loss) before
    extraordinary loss......... $  (0.31) $   0.75  $   0.61  $   (.46) $    .87  $    .43
  Extraordinary loss...........       --        --        --        --      (.05)       --
                                --------  --------  --------  --------  --------  --------
Net income (loss).............. $  (0.31) $   0.75  $   0.61  $   (.46) $    .82  $    .43
                                ========  ========  ========  ========  ========  ========
Weighted average number of
  common shares outstanding....   22,615    23,037    23,032    22,906    22,821    22,775


Summary Consolidated            October   October   October   October   February  February
Balance Sheet Data              31, 1997  31, 1996  31, 1995  31, 1994  28, 1994  28, 1993
- ------------------------------- --------  --------  --------  --------  --------  --------
Total assets................... $637,082  $614,111  $645,378  $612,925  $539,602  $465,029
Mortgages and notes payable.... $184,519  $145,336  $183,044  $167,179  $ 68,244  $ 66,699
Bonds collateralized by
  mortgages receivable......... $  7,855  $  9,231  $ 17,880  $ 20,815  $ 30,343  $ 39,914
Participating senior
  subordinated debentures
  and subordinated notes....... $190,000  $200,000  $200,000  $200,000  $200,000  $152,157
Stockholders' equity........... $178,762  $193,622  $176,335  $162,130  $171,001  $151,937
</TABLE>


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS


CAPITAL RESOURCES AND LIQUIDITY

     The Company's cash uses during the twelve months ended October 31,1997 were
for operating expenses, seasonal increases in housing inventories, construction,
income taxes and interest.  The Company provided for its cash requirements from
outside borrowings, the revolving credit facility, the sale of a commercial
facility, and land purchase notes, as well as from housing, land sales, and
other revenues.  The Company believes that these sources of cash are sufficient
to finance its working capital requirements and other needs.

     In December 1996 the Board of Directors authorized a stock repurchase
program to purchase up to 2 million shares of Class A Common Stock.  As of
October 31, 1997, 1,184,400 shares were repurchased under this program.

     The Company's bank borrowings are made pursuant to a revolving credit
agreement (the "Agreement") which provides a revolving credit line and letter
of credit line of up to $245,000,000 through March 2000.  Interest is payable
monthly and at various rates of either prime plus 1/8% or Libor plus 1.625%.
The Company believes that it will be able either to extend the Agreement beyond
March 2000 or negotiate a replacement facility, but there can be no assurance of
such extension or replacement facility.  The Company currently is in compliance
and intends to maintain compliance with its covenants under the Agreement.  As
of October 31, 1997, borrowings under the Agreement were $95,000,000.

     The aggregate principal amount of subordinated indebtedness issued by the
Company and outstanding as of October 31, 1997 was $190,000,000.  Annual sinking
fund payments of $10,000,000 and $20,000,000 are required in April 2001 and
2002, respectively, with additional payments of $60,000,000 and $100,000,000 due
in April 2002 and June 2005, respectively.

     The Company's mortgage banking subsidiary borrows under a bank warehousing
arrangement.  Other finance subsidiaries formerly borrowed from a multi-builder
owned financial corporation and  a builder owned financial corporation to
finance mortgage backed securities but in fiscal 1988 decided to cease further
borrowing from multi-builder and builder owned financial corporations.  These
non-recourse borrowings have been generally secured by mortgage loans
originated by one of the Company's subsidiaries.  As of October 31, 1997, the
aggregate outstanding principal amount of such borrowings was $53,678,000.

     The book value of the Company's inventories, rental condominiums, and
commercial properties completed and under development amounted to the following:

                                          October 31,   October 31,
                                             1997          1996
                                          ------------  ------------

Residential real estate inventory.......  $410,393,000  $376,307,000
Residential rental property.............    11,412,000    12,190,000
                                          ------------  ------------
    Total residential real estate.......   421,805,000   388,497,000
Commercial properties...................    38,946,000    53,204,000
                                          ------------  ------------
    Combined Total......................  $460,751,000  $441,701,000
                                          ============  ============

     Total residential real estate increased $33,308,000 from October 31, 1996
to October 31, 1997 as a result of an inventory increase of $51,407,000 which
was partially offset by the reallocation of land and approval costs to
commercial properties (see below), the writedown of certain communities under
development or land held for sale, and the write-off of optioned parcels of
land and related approval, engineering and capitalized interests costs.  See
"Notes to Consolidated Financial Statements - Note 10."  The increase in
residential real estate inventory was primarily due to the Company's efforts
to increase deliveries in its first quarter requiring higher inventory levels
which were offset somewhat by the Company reducing inventories in the Florida
market where competition has reduced its sales volume.  Residential homes
under construction or completed and included in residential real estate
inventory at October 31, 1997 are expected to be closed during the next
twelve months.  Most residential real estate completed or under development
is financed through the Company's line of credit and subordinated indebtedness.

     The following table summarizes housing lots included in the Company's total
residential real estate:

                                     Total         Contracted       Remaining
                                     Home              Not             Lots
                                     Lots          Delivered        Available
                                   --------        ----------       ---------
October 31, 1997:
   Owned..........................   8,266             1,848           6,418
   Optioned.......................  12,159                24          12,135
                                   --------        ----------       ---------
     Total........................  20,425             1,872          18,553
                                   ========        ==========       =========
October 31, 1996:
   Owned..........................   9,819             1,440           8,379
   Optioned.......................  12,041                76          11,965
                                   --------        ----------       ---------
     Total........................  21,860             1,516          20,344
                                   ========        ==========       =========

     The following table summarizes the Company's started or completed unsold
homes in active, substantially completed and suspended communities:

                               October 31,                  October 31,
                                  1997                         1996
                      --------------------------    -------------------------
                      Unsold                        Unsold
                      Homes     Models    Total     Homes     Models    Total
                      ------    ------    ------    ------    ------    ------

Northeast Region....    279        63       342       242        71       313
North Carolina......     83        --        83        68        --        68
Florida.............     47        11        58        51        10        61
Virginia............     16        10        26        18         3        21
California..........     60        16        76        67        24        91
Poland..............     10         2        12         2         2         4
                      ------    ------    ------    ------    ------    ------
   Total                495       102       597       448       110       558
                      ======    ======    ======    ======    ======    ======

     Previously the Company's commercial properties represented long-term
investments in commercial and retail facilities completed or under development.
At the end of the second quarter the Company announced it was planning an
orderly exit from the business of owning investment properties.  The Company
plans to sell its investment properties (except for the two senior citizen
rental communities) which after the elimination of debt will net approximately
$35.0 million to be redeployed in its residential homebuilding business.
Management believes redeployment of this capital will enhance future
profitability of the Company.  In accordance with FAS 121, the Company
reevaluated such properties as held for sale.  Since certain investment
properties' carrying amounts exceeded the fair value less selling costs, an
impairment loss was recorded against the related asset.  These writedowns were
on New Jersey and Florida properties.  See "Notes to Consolidated Financial
Statements - Note 10."  In New Jersey the Company also wrote off the costs
related to an option and related approval, engineering and capitalized interest
costs.  The writedowns and write-offs of investment properties amounted to
$14,446,000.  The writedowns and write-offs were partially offset by the
reallocation of land and approval costs on a multi-use parcel of land.  As a
result of the reallocation, $7,143,000 was added to investment properties held
for sale from homebuilding land held for future development.

     Since the announcement, the Company sold one retail center which had a book
value of $10,117,000 at October 31, 1996 and a loan balance of $11,376,000 at
the time of sale, for $15,100,000.  The remaining commercial properties with a
book value of $38,946,000 and a loan balance of $19,241,000, both at October 31,
1997 have an estimated sales value of approximately $54,000,000.  In November
1997, four properties with a book value of $19,585,000 and a loan balance of
$13,530,000 at October 31, 1997 were sold for $24,700,000.  The balance of the
properties are expected to be sold before October 31, 1998.  In addition, a 50%
owned partnership is under contract to sell its retail center.  Net proceeds to
the Company from the sale should amount to approximately $2,600,000.

     Collateral Mortgage Financing - collateral for bonds payable consist of
collateralized mortgages receivable which are pledged against non-recourse
collateralized mortgage obligations.  Financial Services - mortgage loans held
for sale consist of residential mortgages receivable of which $47,660,000 and
$57,095,000 at October 31, 1997 and October 31, 1996, respectively, are being
temporarily warehoused and awaiting sale in the secondary mortgage market.  The
balance of mortgage loans held for sale is being held as an investment by the
Company. The Company may incur risk with respect to mortgages that are
delinquent, but only to the extent the losses are not covered by mortgage
insurance or resale value of the house.  Historically, the Company has incurred
minimal credit losses.


RESULTS OF OPERATIONS

     The Company's operations consist primarily of residential housing
development and sales in its Northeast Region (comprised primarily of New
Jersey, southern New York state, and eastern Pennsylvania), in southeastern
Florida, North Carolina, Metro Washington, D. C. (northern Virginia), southern
California, and Poland.  Operations in Poland began for the first time during
the year ended October 31, 1996, but deliveries did not occur until the year
ended October 31, 1997.  In addition, the Company had developed and operates
commercial properties as long-term investments in New Jersey, and, to a lesser
extent, Florida, but is exiting this business (see "Investment Properties"
below).

     During the years ended October 31, 1997, 1996, and 1995, the Company's
Northeast Region and North Carolina Division housing operations consistently
produced operating profits.  In fiscal 1997 the Company's California housing
operations produced a small profit for the first time since its startup in 1994.
These profits have been reduced by net losses from its other housing divisions,
its other operations, the writedown of certain residential inventories and
commercial properties to their estimated fair value and the write-off of
optioned properties and related approval, engineering and capitalized interest
costs.  See "Notes to Consolidated Financial Statements - Note 10".


Total Revenues

     Compared to the same prior period revenues increased (decreased) as
follows:

                                               Year Ended
                                     -----------------------------
                                     October    October    October
                                     31, 1997   31, 1996   31, 1995
                                     ---------  ---------  ---------
                                         (Dollars in Thousands)
Homebuilding:
  Sale of homes......................$(32,875)  $ 24,201   $ 69,611
  Land sales and other revenues......   8,371      3,214      5,640
Financial services...................    (481)       868        (25)
Investment properties................   2,838      1,388       (792)
Collateralized mortgage financing....  (1,181)        48     (1,132)
                                     ---------  ---------  ---------
     Total change....................$(23,328)  $ 29,719   $ 73,302
                                     =========  =========  =========
  Percent change....................    (2.9%)      3.8%      10.4%
                                     =========  =========  =========

Homebuilding

     Compared to the same prior period, housing revenues decreased $32.9
million or 4.3% for the year ended October 31, 1997, after increasing $24.2
million or 3.3% for the year ended October 31, 1996, and $69.6 million or
10.4% for the year ended October 31, 1995.  Housing revenues are recorded at the
time each home is delivered and title and possession have been transferred to
the buyer.

     Information on homes delivered by market area is set forth below:

                                         Year Ended
                              ---------------------------------
                              October     October     October
                              31, 1997    31, 1996    31, 1995
                              ---------   ---------   ---------
                                   (Dollars in Thousands)
Northeast Region:
  Housing Revenues............$445,817    $460,931    $492,388
  Homes Delivered.............   2,128       2,364       2,707

North Carolina:
  Housing Revenues............$125,242    $123,347    $115,919
  Homes Delivered.............     695         738         718

Florida:
  Housing Revenues............$ 74,146    $ 99,085    $ 67,272
  Homes Delivered.............     418         632         451

Metro Washington, D. C.:
  Housing Revenues............$ 14,398    $ 16,749    $ 36,006
  Homes Delivered.............      70          75         186

California:
  Housing Revenues............$ 69,252    $ 64,570    $ 27,707
  Homes Delivered.............     365         325         149

Poland (97) and Other(95):
  Housing Revenues............$  2,952         --     $  1,189
  Homes Delivered.............$     41         --           33

Totals:
  Housing Revenues............$731,807    $764,682    $740,481
  Homes Delivered.............   3,717       4,134       4,244

     The overall decrease in housing revenues is a combination of fewer
deliveries offset somewhat by increases in average sales prices.  The decrease
in the number of homes delivered during the year ended October 31, 1997 is
primarily due to the decreased deliveries in the Northeast Region and Florida.
The decrease in the Northeast was due to the timing of deliveries and the
Company's desire to even out deliveries over the four quarters of fiscal 1998.
In Florida, deliveries declined since the Company cut back its operations due
to a highly competitive market.  The increased average sales prices are
primarily the result of diversifying the Company's product mix in the
Northeast Region to include more detached single family homes and larger
townhouses with garages designed for the move-up buyer.  In Florida, average
sales prices increased as a result of fewer communities, all of which are
higher priced single family developments.  In North Carolina, average sales
prices increased primarily due to the addition of higher priced communities.
In Metro Washington, D.C. average sales prices decreased because there was a
lower percentage of single family detached homes delivered.  In California
sales prices decreased due to a change in product mix to smaller less
expensive homes.

     Unaudited quarterly housing revenues and sales contracts using base sales
prices by market area for the years ending October 31, 1997, 1996, and 1995 are
set forth below:

                                            Quarter Ended
                              ------------------------------------------
                              October      July      April     January
                              31, 1997   31, 1997   30, 1997   31, 1997
                              ---------  ---------  ---------  ---------
                                            (In Thousands)
Housing Revenues:
  Northeast Region........... $193,513   $118,186   $ 70,678   $ 63,440
  North Carolina.............   41,566     35,293     26,341     22,042
  Florida....................   28,951     14,325     17,042     13,828
  Metro Washington, D.C......    5,214      2,759      3,018      3,407
  California.................   23,317     15,113     18,489     12,333
  Poland.....................    1,212      1,008        667         65
                              ---------  ---------  ---------  ---------
      Total.................. $293,773   $186,684   $136,235   $115,115
                              =========  =========  =========  =========

Sales Contracts (Net of
  Cancellations):
  Northeast Region........... $134,280   $124,860   $118,840   $ 92,544
  North Carolina.............   29,409     30,339     35,988     31,506
  Florida....................   11,134     15,296     21,399      9,708
  Metro Washington, D.C......    5,618      3,761      5,279      2,478
  California.................   24,255     22,785     22,383     16,268
  Poland.....................    2,109        436        468      1,607
                              ---------  ---------  ---------  ---------
      Total.................. $206,805   $197,477   $204,357   $154,111
                              =========  =========  =========  =========

                                            Quarter Ended
                              ------------------------------------------
                              October      July      April     January
                              31, 1996   31, 1996   30, 1996   31, 1996
                              ---------  ---------  ---------  ---------
                                            (In Thousands)
Housing Revenues:
  Northeast Region........... $210,951   $112,665   $ 81,950   $ 55,365
  North Carolina.............   44,334     33,506     24,445     21,062
  Florida....................   38,910     21,407     20,890     17,878
  Metro Washington, D.C......    5,538      3,614      3,200      4,397
  California.................   25,747     15,936     13,019      9,868
                              ---------  ---------  ---------  ---------
      Total.................. $325,480   $187,128   $143,504   $108,570
                              =========  =========  =========  =========

Sales Contracts (Net of
  Cancellations):
  Northeast Region........... $149,930   $ 94,933   $147,576   $ 55,785
  North Carolina.............   28,973     31,485     43,136     19,594
  Florida....................   13,485     19,668     41,003     19,315
  Metro Washington, D.C......    1,638      2,249      5,821      3,463
  California.................   16,419     14,847     19,496      8,209
  Poland.....................    1,306         --         --         --
                              ---------  ---------  ---------  ---------
      Total.................. $211,751   $163,182   $257,032   $106,366
                              =========  =========  =========  =========

                                           Quarter Ended
                              ------------------------------------------
                              October      July      April     January
                              31, 1995   31, 1995   30, 1995   31, 1995
                              ---------  ---------  ---------  ---------
                                            (In Thousands)
Housing Revenues:
  Northeast Region........... $228,548   $101,431   $ 89,536   $ 72,874
  North Carolina.............   41,581     29,670     23,083     21,585
  Florida....................   23,387     14,037     13,931     15,917
  Metro Washington, D.C......    9,764     12,335      9,021      4,886
  California.................   16,545      5,902      3,166      2,094
  Other......................      --         --         870        318
                              ---------  ---------  ---------  ---------
      Total.................. $319,825   $163,375   $139,607   $117,674
                              =========  =========  =========  =========

Sales Contracts (Net of
  Cancellations):
  Northeast Region........... $102,506   $104,449   $115,774   $ 78,964
  North Carolina.............   28,494     33,017     32,208     25,529
  Florida....................   19,197     17,541     19,734     13,214
  Metro Washington, D.C......    4,621      9,325     13,719      5,094
  California.................   13,624     10,989      7,014      4,227
  Other......................      --         --         751         42
                              ---------  ---------  ---------  ---------
      Total.................. $168,442   $175,321   $189,200   $127,070
                              =========  =========  =========  =========

     The Company's contract backlog using base sales prices by market area is
set forth below:

                                 October    October    October
                                 31, 1997   31, 1996   31, 1995
                                 ---------  ---------  ---------
                                      (Dollars in Thousands)
Northeast Region:
   Total Contract Backlog........$266,889   $198,248   $176,517
   Number of Homes...............   1,287        977        885

North Carolina:
   Total Contract Backlog........$ 45,879   $ 43,587   $ 43,336
   Number of Homes...............     232        233        253

Florida:
   Total Contract Backlog........$ 25,315   $ 36,910   $ 36,213
   Number of Homes...............     150        217        243

Metro Washington, D. C.:
   Total Contract Backlog........$  7,621   $  4,252   $  6,592
   Number of Homes...............      27         24         28

California:
   Total Contract Backlog........$ 25,636   $  8,073   $ 13,043
   Number of Homes...............     137         46         67

Poland:
   Total Contract Backlog........   2,974   $  1,306        --
   Number of Homes...............      39         19        --

Totals:
   Total Contract Backlog........$374,314   $292,376   $275,701
   Number of Homes...............   1,872      1,516      1,476

     The Company has written down or written off certain residential
inventories $14.0 million, $1.6 million and $2.8 million during the years ended
October 31, 1997, 1996, and 1995, respectively, to their estimated fair
value.  See "Notes to Consolidated Financial Statements - Note 10" for
additional explanation. These writedowns and writeoffs were incurred primarily
because of lower property values due to economic downturns, a change in the
marketing strategy to liquidate a particular property, or the decision not to
exercise an option.

     During the year ended October 31, 1997 the Company has written down certain
residential communities, and written off certain residential land options
including approval, engineering and capitalized interest costs.  In Florida the
Company's return on investment has been unsatisfactory.  As a result, the
Company established a goal to reduce its investment in Florida by $25.0 million.
To do so on an accelerated basis, it reduced prices and offered pricing
concessions in all Florida residential communities.  The Company also decided to
sell all inactive properties in Florida.  In the Northeast Region the Company
changed the product type to be constructed on a parcel of land it owns.  In an
active community in the Northeast Region the Company incurred unforeseen
development costs.  Also in the Northeast the Company decided to sell an
optioned property instead of developing it.  The result of the above decisions
was a reduction in fair values below carrying amounts and, in accordance with
FAS 121, the Company recorded an impairment loss on the related inventories.
At October 31, 1997 residential inventories were reduced $9.3 million to reduce
such inventories to estimated fair value.  The Northeast Region also wrote off
costs associated with three option properties and related approval, engineering
and capitalized interest costs amounting to $4.7 million.  In two cases, the
Company decided not to exercise the option due to environmental problems.  The
third option was not exercised because the community's proforma profitability
did not produce an adequate return on investment commensurate with the risk.

     The writedowns of residential inventories during the years ended October
31, 1996 and October 31, 1995 were primarily attributable to one community in
New York, two in New Jersey, a parcel of land in Florida, and four communities
in Metro Washington, D.C.  In the New York community, the 1995 writedown is an
addition to 1994 and prior years' reserves due to reduced sales prices, buyers'
concessions, and an extended sellout period.  In New Jersey the 1996 and 1995
writedowns were due to the change in use of a parcel of land from residential to
commercial and due to the termination of home sales in a community and the
offering of the remaining owned lots for sale, respectively.  In Florida a
parcel of idle land was written down in 1996 due to a decline in land values.
In Metro Washington, D.C. the 1996 writedown was primarily due to reduced sales
prices in one community.  The 1995 writedown was also due to the termination of
home sales in two communities and the offering of the remaining owned lots for
sale.  Also in Metro Washington, D.C. a reserve was taken in 1995 against a
parcel of land which the Company is attempting to liquidate through lot sales
and increased in 1996 due to continued decline in lot values.  At October 31,
1996 and 1995 residential inventories were reduced $5.1 million and $9.6
million, respectively, to reduce such inventories to estimated fair value.

     Cost of sales includes expenses for housing and land and lot sales.  A
breakout of such expenses for housing sales and housing gross margin is set
forth below:

                                       Year Ended
                             ---------------------------------
                             October     October     October
                             31, 1997    31, 1996    31, 1995
                             ---------   ---------   ---------
                                  (Dollars In Thousands)

Sale of homes..............  $731,807    $764,682    $740,481
Cost of sales..............   617,312     638,944     617,681
                             ---------   ---------   ---------
Housing gross margin.......  $114,495    $125,738    $122,800
                             =========   =========   =========
Gross margin percentage....     15.6%       16.4%       16.6%
                             =========   =========   =========

     Cost of sales expenses as a percentage of home sales revenues are presented
below:

                                      Year Ended
                             ---------------------------------
                             October     October     October
                             31, 1997    31, 1996    31, 1995
                             ---------   ---------   ---------
                                  (Dollars In Thousands)

Sale of homes..............    100.0%      100.0%      100.0%
                             ---------   ---------   ---------
Cost of sales:
  Housing, land and
   development costs.......     76.0        75.5        75.1
  Commissions..............      2.0         1.7         1.9
  Financing concessions....      0.9         1.0         0.8
  Overheads................      5.5         5.4         5.6
                             ---------   ---------   ---------
Total cost of sales........     84.4        83.6        83.4
                             ---------   ---------   ---------
Gross margin...............     15.6%       16.4%       16.6%
                             =========   =========   =========

     The Company sells a variety of home types in various local communities,
each yielding a different gross margin.  As a result, depending on the mix of
both communities and of home types delivered, consolidated gross margin will
fluctuate up or down.  During the year ended October 31, 1997 gross margins
decreased in all the Company's markets compared to the same period last year.
This decline was primarily caused by higher housing, land and development costs
and commission expenses.  0.3% of the increase was the result of unforeseen
development costs in one community in the Northeast Region.  The balance of the
increase in housing, land and development costs was due to a higher number of
communities not obtaining acceptable housing, land and development cost
performance.  The increase in commissions was the result of more co-broker
sales and sales associate incentives to increase sales.

     During the year ended October 31, 1996 gross margins improved in all the
Company's markets except Metro Washington, D.C. compared to the year ended
October 31, 1995.  These increases were offset by a change in geographic and
product mix with an additional 6.2% of home deliveries coming from outside the
Northeast Region where gross margins are traditionally lower.

     Selling and general administrative expenses increased $1.8 million and $0.8
million for the years ended October 31, 1997 and 1996, respectively.  As a
percentage of homebuilding revenues such expenses increased to 8.2% for the year
ended October 31, 1997 from 7.7% for the year ended October 31, 1996 which had
decreased from 7.9% for the prior year.  The dollar increase is due primarily to
increased advertising and sales center operations.  The percentage increase
during the year ended October 31, 1997 was due to increased costs while home
deliveries declined.  The percentage decrease in 1996 was due to increased
deliveries.


Land Sales and Other Revenues

     Land sales and other revenues consist primarily of land and lot sales,
interest income, contract deposit forfeitures, corporate owned life insurance
benefits, and California housing management operations.

     A breakout of land and lot sales is set forth below:

                                                Year Ended
                                       ----------------------------
                                       October   October   October
                                       31, 1997  31, 1996  31, 1995
                                       --------  --------  --------
                                              (In Thousands)

Land and lot sales...................  $22,855   $13,998   $ 8,101
Cost of sales........................   17,005    12,548     6,714
                                       --------  --------  --------
Land and lot sales gross margin......  $ 5,850   $ 1,450   $ 1,387
                                       ========  ========  ========

Land and lot sales are incidental to the Company's residential housing
operations and are expected to continue in the future but may significantly
fluctuate up or down.

     During the year ended October 31, 1995 other revenues also included a $1.0
million gain from the sale of an investment and $1.2 million of net interest
receipts due to amendments to prior years' Federal income tax returns.  In 1994
the Company purchased a home building and management company in California.
Although no new management contracts were obtained, existing contracts resulted
in $1.0 million of revenues for the year ended October 31, 1995.  Included in
Other Operations (see below) are expenses associated with the California
homebuilding management operations and amortization of all of the acquisition
price.


Financial Services

     Financial services consists primarily of originating mortgages from sales
of the Company's homes, and selling such mortgages in the secondary market.
Approximately 42%, 41%, and 34% of the Company's homebuyers obtained mortgages
originated by the Company's wholly-owned mortgage banking subsidiaries during
the years ended October 31, 1997, 1996, 1995, respectively.  The Company's
mortgage banking goals are to improve profitability by increasing the capture
rate of its homebuyers and expanding its business to include originations from
unrelated mortgages.  In addition, its goals included reducing expenses by
reducing mortgage processing time.  The processing time from application to
issuance of approval was reduced to an average of under 10 days.  As a result
of increased capture rates of Company homebuyers, the Company expects to be
profitable in fiscal 1998 and beyond.  Most servicing rights on new mortgages
originated by the Company will be sold as the loans are closed.


Investment Properties

     Investment Properties consist of rental properties, property management,
and gains or losses from sale of such property.  See "Capital Resources and
Liquidity" for information on the Company's decision to sell its investment
properties.  As a result, the Company wrote down or wrote off investment
property assets of $14,446,000.  At October 31, 1997, the Company owned and was
leasing two office buildings, three office/warehouse facilities, one retail
center, and two senior citizen rental communities.  The Company plans to
liquidate all properties (except for senior rentals) by October 31, 1998.
During the years ended October 31, 1997 and 1996, investment property revenues
included a $4.9 million pretax gain and a $2.0 million pretax gain,
respectively, from the sale of two retail centers, one in each year. 
Investment properties' expenses do not include interest expense
(see "Interest" below).


Collateralized Mortgage Financing

     In the years prior to February 29, 1988 the Company pledged mortgage loans
originated by its mortgage banking subsidiaries against collateralized mortgage
obligations ("CMO's").  Subsequently, the Company discontinued its CMO program.
As a result, CMO operations are diminishing as pledged loans are decreasing
through principal amortization and loan payoffs, and related bonds are reduced.
In recent years, as a result of bonds becoming callable, the Company has also
sold a portion of its CMO pledged mortgages.


Corporate General and Administrative

     Corporate general and administration expenses includes the operations at
the Company's headquarters in Red Bank, New Jersey.  As a percentage of total
revenues such expenses were 1.9%, 1.7%, and 1.7% for the years ended October 31,
1997, 1996, and 1995, respectively.  Such expenses include the Company's long
term improvement initiatives of total quality, process redesign (net of
capitalized expenses), and training.  Such initiatives resulted in additional
expenses for the years ended October 31, 1997, 1996, and 1995 amounting to $2.2
million, $1.6 million, and $2.0 million, respectively.  In 1997 all Corporate
bonuses to be paid based on Return on Equity were eliminated due to the net
loss for the year.  For the year ended October 31, 1996 such expenses
included a one-time insurance adjustment.  In 1997 and 1996 such expenses
also included increased depreciation on recently acquired computer equipment
for all Company locations and increased Information Services operations.

     The Company has assessed and formulated a plan to resolve any year 2000
issues.  The plan includes internal and external resources.  The Company does
not anticipate this plan to have a material impact on future earnings and is
expected to be completed by the end of fiscal 1999.

Interest

     Interest expense includes housing, land and lot, and rental properties
interest.  Interest expense is broken down as follows:

                                           Year Ended
                                 -------------------------------
                                 October    October    October
                                 31, 1997   31, 1996   31, 1995
                                 ---------  ---------  ---------
                                          (In Thousands)

Sale of homes..................  $ 29,505   $ 25,992   $ 24,706
Land and lot sales.............       962        657        735
Rental properties..............     5,308      5,508      5,303
                                 ---------  ---------  ---------
Total..........................  $ 35,775   $ 32,157   $ 30,744
                                 =========  =========  =========

Housing interest as a percentage of sale of home revenues amounted to 4.0%,
3.4%, and 3.3% for the years ended October 31, 1997, 1996, and 1995,
respectively.  The increase in the percentage for the year ended October 31,
1997 was primarily the result of the Company discontinuing the capitalization of
interest on communities in planning which were not under active development.  As
a result, interest expense increased approximately $2.8 million for the year
ended October 31, 1997.


Other Operations

     Other operations consisted primarily of miscellaneous residential housing
operations, amortization of prepaid subordinated note issuance expenses,
corporate owned life insurance loan interest, and California housing management
operations (see "Land Sales and Other Revenues" above).  During the year ended
October 31, 1995 other expenses included California housing management expenses
and amortization of purchased management contracts amounting to $1.2 million.
The years ended October 31, 1996 and 1995 also included the cost of
organizational restructuring amounting to $0.3 million and $1.3 million,
respectively, in the Northeast Region and California.


Total Taxes

     Net tax benefits as a percentage of the loss before income taxes amounted
to 42.5% for the year ended October 31, 1997.  Total taxes as a percentage of
income before income taxes amounted to 30.9% and 34.8% for the years ended
October 31, 1996 and 1995, respectively. Deferred federal and state income tax
assets primarily represents the deferred tax benefits arising from temporary
differences between book and tax income which will be recognized in future
years.  (See "Notes to Consolidated Financial Statements - Note 9" for an
additional explanation of taxes.)


Inflation

     Inflation has a long-term effect on the Company because increasing costs of
land, materials and labor result in increasing sales prices of its homes.  In
general, these price increases have been commensurate with the general rate of
inflation in the Company's housing markets and have not had a significant
adverse effect on the sale of the Company's homes.  A significant inflationary
risk faced by the housing industry generally is that rising housing costs,
including land and interest costs, will substantially outpace increases in the
income of potential purchasers.  In recent years, in the price ranges in which
it sells homes, the Company has not found this risk to be a significant problem.

     Inflation has a lesser short-term effect on the Company because the Company
generally negotiates fixed price contracts with its subcontractors and material
suppliers for the construction of its homes.  These prices usually are
applicable for a specified number of residential buildings or for a time period
of between four to twelve months.  Construction costs for residential buildings
represent approximately 56% of the Company's total costs and expenses.


Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Financial statements of Hovnanian Enterprises, Inc. and its consolidated
subsidiaries are set forth herein beginning on Page F-1.


Item 9 - CHANGES IN OR DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.

     During the years ended October 31, 1997, 1996, and 1995, there have not
been any changes in or disagreements with accountants on accounting and
financial disclosure.

PART III

Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information called for by Item l0, except as set forth below under the
heading "Executive Officers of the Registrant", is incorporated herein by
reference to the Company's definitive proxy statement to be filed pursuant to
Regulation l4A, in connection with the Company's annual meeting of shareholders
to be held on April 14, 1998, which will involve the election of directors.

Executive Officers of the Registrant

     The executive officers of the Company are listed below and brief summaries
of their business experience and certain other information with respect to them
are set forth following the table.  Each executive officer holds such office for
a one year term.

                                                                 Year Started
       Name            Age             Position                  With Company

Kevork S. Hovnanian     74    Chairman of the Board and               l967
                                Director of the Company.

Ara K. Hovnanian        40    Chief Executive Officer, President      1967
                                and Director of the Company.

Paul W. Buchanan        47    Senior Vice President-Corporate         l981
                                Controller and Director of the
                                Company.

William L. Carpitella   43    Senior Vice President,
                                Organizational Development            1997

Peter S. Reinhart       47    Senior Vice President and General       1978
                                Counsel and Director of the
                                Company.

John J. Schimpf         48    Executive Vice President and            1981
                                Director of the Company.

J. Larry Sorsby         42    Senior Vice President, Treasurer        1988
                                and Chief Financial Officer and
                                Director of the Company


     Mr. K. Hovnanian founded the predecessor of the Company in l959 (Hovnanian
Brothers, Inc.) and has served as Chairman of the Board of the Company since
its incorporation in l967.  Mr. K. Hovnanian was also Chief Executive
Officer of the Company from 1967 to July 1997.

     Mr. A. Hovnanian was appointed President in April 1988, after serving as
Executive Vice President from March 1983.  He has also served as Chief
Executive Officer since July 1997.  Mr. A. Hovnanian was elected a Director of
the Company in December l98l.  Mr. A. Hovnanian is the son of Mr. K. Hovnanian.

     Mr. Buchanan was appointed Senior Vice President-Corporate Controller in
May l990, after serving as Vice President-Corporate Controller from March 1983.
Mr. Buchanan was elected a Director of the Company in March l982.

     Mr. Carpitella joined the Company in September 1997.  Prior to joining the
Company Mr. Carpitella was Vice President, Human Resources for a division of
Pulte Home Corp. from April 1995 to August 1997.  From February 1992 Mr.
Carpitella was Vice President Human Resources for Geo. J. Ball Co.

     Mr. Reinhart was appointed Senior Vice President and General Counsel in
April 1985 after serving as Vice President and Chief Legal Counsel since March
l983.  Mr. Reinhart was elected a Director of the Company in December l98l.

     Mr. Schimpf was appointed Executive Vice President of the Company in April
1988 after serving as Senior Vice President from April 1985.  Mr. Schimpf was
elected a Director of the Company in June 1986.

     Mr. Sorsby was appointed Senior Vice President, Treasurer and Chief
Financial Officer of the Company in February, 1996 after serving as Senior Vice
President-Finance/Treasurer of the Company since March 1991.


Item 11 - EXECUTIVE COMPENSATION

     The information called for by Item ll is incorporated herein by reference
to the Company's definitive proxy statement to be filed pursuant to Regulation
l4A, in connection with the Company's annual meeting of shareholders to be held
on April 14, 1998, which will involve the election of directors.

Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information called for by Item l2 is incorporated herein by reference
to the Company's definitive proxy statement to be filed pursuant to Regulation
l4A, in connection with the Company's annual meeting of shareholders to be held
on April 14, l998, which will involve the election of directors.

Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information called for by Item l3 is incorporated herein by reference
to the Company's definitive proxy statement to be filed pursuant to Regulation
l4A, in connection with the Company's annual meeting of shareholders to be held
on April 14, 1998, which will involve the election of directors.

PART IV

Item 14 - EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES
          AND REPORTS ON FORM 8-K
                                                                     Page

Financial Statements:

  Index to Consolidated Financial Statements.......................  F-1
  Independent Auditors' Report.....................................  F-2
  Consolidated Balance Sheets at October 31, 1997 and 1996.........  F-3
  Consolidated Statements of Operations for the years ended
     October 31, 1997, 1996, and 1995..............................  F-5
  Consolidated Statements of Stockholders' Equity for the years
     ended October 31, 1997, 1996, and 1995........................  F-6
  Consolidated Statements of Cash Flows for the years ended
     October 31, 1997, 1996, and 1995..............................  F-7
Notes to Consolidated Financial Statements.........................  F-8

Financial Statement Schedules:

  VIII  Valuation and Qualifying Accounts..........................  F-20
  X     Supplementary Income Statement Information.................  F-21
  XI    Real Estate and Accumulated Depreciation...................  F-22

     All other schedules are either not applicable to the Company or have been
omitted because the required information is included in the financial statements
or notes thereto.
Exhibits:

     3(a)  Certificate of Incorporation of the Registrant.(1)
     3(b)  Certificate of Amendment of Certificate of Incorporation of the
           Registrant.(8)
     3(c)  Bylaws of the Registrant.(8)
     4(a)  Specimen Class A Common Stock Certificate.(8)
     4(b)  Specimen Class B Common Stock Certificate.(8)
     4(c)  Indenture dated as of April 29, 1992, relating to 11 1/4%
           Subordinated Notes between the Registrant and First Fidelity Bank,
           including form of 11 1/4% Subordinated Notes due April 15,
           2002.(2)
     4(d)  Indenture dated as of May 28, 1993, relating to 9 3/4%
           Subordinated Notes between Registrant and First Fidelity Bank,
           National Association, New Jersey, as Trustee, including form of
           9 3/4% Subordinated Note due 2005.(4)
     10(a) Credit Agreement dated July 30, 1993 among K. Hovnanian
           Enterprises, Inc., Hovnanian Enterprises, Inc., certain
           Subsidiaries Thereof, Midlantic National Bank, Chemical
           Bank, United Jersey Bank/Central, N.A., and NBD Bank, N.A.(7)
     10(b) Amendment to Credit Agreement among K. Hovnanian Enterprises,
           Inc., Hovnanian Enterprises, Inc., Certain Subsidiaries Thereof,
           Midlantic National Bank, Chemical Bank, United Jersey Bank, NBD
           Bank, N.A., PNC Bank, National Association, Meridian Bank, Nations
           Bank of Virginia, N.A., First National Bank of Boston, and
           Continental Bank.(10)
     10(c) Second Amendment to Credit Agreement dated April 28, 1995 among
           K. Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc.,
           Certain Subsidiaries Thereof, Midlantic Bank,N.A., Chemical Bank,
           United Jersey Bank, NBD Bank, PNC Bank, National Association,
           Meridian Bank, Nations Bank, National Association, First National
           Bank of Boston, Bank of America Illinois, and Bank of America
           National Trust and Savings Association.(11)
     10(d) Third Amendment to Credit Agreement dated June 4, 1996 among
           K. Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc.,
           Certain Subsidiaries Thereof, Midlantic Bank,N.A., Chemical Bank,
           Meridian Bank, NationsBank,N.A., First National Bank of Boston,
           Bank of America Illinois, First National Bank of Chicago, Comerica
           Bank, and Credit Lyonnais.(12)
     10(e) Fourth Amendment to Credit Agreement dated May 1997 among
           K. Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc.,
           Certain Subsidiaries Thereof, PNC Bank, N.A., Chase Manhattan
           Bank, Corestates Bank, N.A., NationsBank,N.A., First National
           Bank of Boston, Bank of America Illinois, First National Bank of
           Chicago, Comerica Bank, and Credit Lyonnais. (13)
     10(f) Description of Management Bonus Arrangements.(8)
     10(g) Description of Savings and Investment Retirement Plan.(1)
     10(h) Stock Option Plan.(6)
     10(i) Management Agreement dated August 12, 1983 for the management of
           properties by K. Hovnanian Investment Properties, Inc.(1)
     10(j) Agreement dated July 8, 1981 between Hovnanian Properties of
           Atlantic County, Inc. and Kevork S. Hovnanian.(2)
     10(k) Management Agreement dated December 15, 1985, for the management
           of properties by K. Hovnanian Investment Properties, Inc.(3)
     10(l) Description of Deferred Compensation Plan.(5)
     22    Subsidiaries of the Registrant.
     27    Financial Data Schedules
     (1)   Incorporated by reference to Exhibits to Registration
           Statement (No. 2-85198) on Form S-1 of the Registrant.
     (2)   Incorporated by reference to Exhibits to Registration Statement
           (No. 33-46064) on Form S-3 of the Registrant.
     (3)   Incorporated by reference to Exhibits to Annual Report on Form 10
           -K for the year ended February 28, 1986 of the Registrant.
     (4)   Incorporated by reference to Exhibits to Registration Statement
           (No. 33-61778) on Form S-3 of the Registrant.
     (5)   Incorporated by reference to Exhibits to Annual Report on Form 10-K
           for the year ended February 28, 1990 of the Registrant.
     (6)   Incorporated by reference to the Proxy Statement dated June 15,
           1990.
     (7)   Incorporated by reference to an Exhibit to Quarterly Report on
           Form 10-Q for the quarter ended August 31, 1993, of the Registrant.
     (8)   Incorporated by reference to Exhibits to Annual Report on Form 10-
           K for the year ended February 28, 1994 of the Registrant.
     (9)   Incorporated by reference to an Exhibit to Quarterly Report on
           Form 10-Q for the quarter ended August 31, 1994, of the
           Registrant.
     (10)  Incorporated by reference to Exhibits to Annual Report on Form
           10-K for the eight months ended October 31, 1994 of the
           Registrant.
     (11)  Incorporated by reference to Exhibits to Annual Report on Form
           10K for the year ended October 31, 1995 for the Registrant.
     (12)  Incorporated by reference to Exhibits to Quarterly Report on
           Form 10Q for the quarter ended April 30, 1996 of the Registrant.
     (13)  Incorporated by reference to Exhibits to Quarterly Report on
           Form 10Q for the quarter ended April 30, 1997 of the Registrant.

Reports on Form 8-K

     The Company did not file any reports on Form 8-K during the quarter ended
October 31, 1997.

SIGNATURES

     Pursuant to the requirements of Section l3 or l5(d) of the Securities
Exchange Act of l934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          Hovnanian Enterprises, Inc.
                                      By:

                                          /S/KEVORK S. HOVNANIAN
                                          Kevork S. Hovnanian
                                          Chairman of the Board

     Pursuant to the requirements of the Securities Exchange Act of l934,  this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated


/S/KEVORK S. HOVNANIAN             Chairman of The Board          1/13/98     
Kevork S. Hovnanian                and Director             


/S/ARA K. HOVNANIAN               Chief Executive Officer,        1/13/98
Ara K. Hovnanian                  President and Director           


/S/PAUL W. BUCHANAN               Senior Vice President           1/13/98
Paul W. Buchanan                  Corporate Controller and 
                                  Director


/S/PETER S. REINHART              Senior Vice President and       1/13/98
Peter S. Reinhart                 General Counsel and Director     


/S/JOHN J. SCHIMPF                Executive Vice President        1/13/98
John J. Schimpf                   and Director                     


/S/J. LARRY SORSBY                Senior Vice President,          1/13/98
J. Larry Sorsby                   Treasurer, Chief Financial      
                                  Officer and Director


/S/WILLIAM L. CARPITELLA          Senior Vice President,          1/13/98
William L. Carpitella             Organizational Development      


HOVNANIAN ENTERPRISES, INC.
Index to Consolidated Financial Statements

                                                                      Page
Financial Statements:

   Independent Auditors' Report...................................    F-2

   Consolidated Balance Sheets as of October 31, 1997 and 1996....    F-3

   Consolidated Statements of Operations for the Years Ended
   October 31, 1997, 1996, and 1995...............................    F-5

   Consolidated Statements of Stockholders' Equity for the Years
   Ended October 31, 1997, 1996, and 1995.........................    F-6

   Consolidated Statements of Cash Flows for the Years Ended
   October 31, 1997, 1996, and 1995...............................    F-7

Notes to Consolidated Financial Statements........................    F-8

Financial Statement Schedules:

   VIII Valuation and Qualifying Accounts.........................   F-20

   X    Supplementary Income Statement Information................   F-21

   XI   Real Estate and Accumulated Depreciation..................   F-22

All other schedules have been omitted because the required information of such
other schedules is not present, is not present in amounts sufficient to require
submission of the schedule or because the required information is included in
the financial statements and notes thereto.


INDEPENDENT AUDITORS' REPORT


To the Stockholders and
Board of Directors of
Hovnanian Enterprises, Inc.

We have audited the accompanying consolidated balance sheets of Hovnanian
Enterprises, Inc. and subsidiaries as of October 31, 1997 and 1996, and the
related consolidated statements of income, stockholders' equity and cash flows
for the years ended October 31, 1997, 1996, and 1995.  Our audits also included
the financial statement schedules listed in the Index at Item 14(a).  These
financial statements and schedules are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hovnanian Enterprises, Inc. and subsidiaries at October 31, 1997 and 1996 and
the consolidated results of their operations and cash flows for the years ended
October 31, 1997, 1996, and 1995 in conformity with generally accepted
accounting principles.  Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.


                                              /S/ERNST & YOUNG LLP
                                              Ernst & Young LLP

New York, New York
December 19, 1997

<TABLE>
<CAPTION>
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
                                                     October 31,    October 31,
          ASSETS                                         1997           1996
                                                     ------------   ------------
<S>                                                  <C>            <C>  
Homebuilding:
  Cash and cash equivalents(Note 4).................    $  7,952       $ 16,535
                                                     ------------   ------------
  Inventories - At cost, not in excess of fair
     value (Notes 6 and 10):
    Sold and unsold homes and lots under
     development....................................     363,592        314,630
    Land and land options held for future
      development or sale...........................      46,801         61,677
                                                     ------------   ------------
      Total Inventories.............................     410,393        376,307
                                                     ------------   ------------
  Receivables, deposits, and notes (Notes 5 and 11).      35,723         26,442
                                                     ------------   ------------
  Property, plant, and equipment - net (Note 3).....      18,027         18,251
                                                     ------------   ------------
  Prepaid expenses and other assets.................      36,708         31,939
                                                     ------------   ------------
      Total Homebuilding............................     508,803        469,474
                                                     ------------   ------------
Financial Services:
  Cash..............................................       2,598          4,196
  Mortgage loans held for sale (Note 5).............      48,382         57,812
  Other assets......................................       2,518          3,217
                                                     ------------   ------------
      Total Financial Services......................      53,498         65,225
                                                     ------------   ------------
Investment Properties:
  Held for sale:
    Rental property - net.........................        23,920
    Land and improvements.........................        15,026
    Other assets..................................         1,397
  Held for investment:
    Rental property - net.........................        11,412         51,892
    Land and improvements.........................                       13,502
    Other assets..................................         1,835          3,292
                                                     ------------   ------------
      Total Investment Properties...................      53,590         68,686
                                                     ------------   ------------
Collateralized Mortgage Financing:
  Collateral for bonds payable (Note 5).............       7,999          9,478
  Other assets......................................         627            576
                                                     ------------   ------------
      Total Collateralized Mortgage Financing.......       8,626         10,054
                                                     ------------   ------------
Income Taxes Receivable - Including deferred tax
  benefits (Note 9).................................      12,565            672
                                                     ------------   ------------
Total Assets........................................    $637,082       $614,111
                                                     ============   ============
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
                                                       October 31,   October 31,
LIABILITIES AND STOCKHOLDERS' EQUITY                      1997          1996
                                                      ------------  ------------
<S>                                                   <C>           <C>
Homebuilding:
  Nonrecourse land mortgages (Note 6)................    $ 20,625      $25,151
  Accounts payable and other liabilities.............      45,521       45,146
  Customers' deposits (Note 4).......................      22,422       12,371
  Nonrecourse mortgages secured by operating
    properties (Note 5)..............................       3,830        3,918
                                                      ------------  ------------
      Total Homebuilding.............................      92,398       86,586
                                                      ------------  ------------
Financial Services:
  Accounts payable and other liabilities.............       1,522        1,631
  Mortgage warehouse line of credit (Note 5).........      45,823       55,196
                                                      ------------  ------------
      Total Financial Services.......................      47,345       56,827
                                                      ------------  ------------
Investment Properties:
  Accounts payable and other liabilities.............         502          721
  Nonrecourse mortgages secured by rental property
    (Note 6).........................................      19,241       31,071
                                                      ------------  ------------
      Total Investment Properties....................      19,743       31,792
                                                      ------------  ------------
Collateralized Mortgage Financing:
  Accounts payable and other liabilities.............          10           11
  Bonds collateralized by mortgages receivable (Note 5)     7,855        9,231
                                                      ------------  ------------
      Total Collateralized Mortgage Financing........       7,865        9,242
                                                      ------------  ------------
Notes Payable:
  Revolving credit agreement (Note 6)................      95,000       30,000
  Subordinated notes (Note 7)........................     190,000      200,000
  Accrued interest...................................       5,969        6,042
                                                      ------------  ------------
      Total Notes Payable............................     290,969      236,042
                                                      ------------  ------------
      Total Liabilities..............................     458,320      420,489
                                                      ------------  ------------
Commitments and Contingent Liabilities (Notes 4 and 13)

Stockholders' Equity (Notes 11 and 12):
  Preferred Stock,$.01 par value-authorized 100,000
    shares; none issued
  Common Stock,Class A,$.01 par value-authorized
    87,000,000 shares; issued 15,628,115 shares
    (including 1,530,274 shares in 1997 and
    345,874 shares in 1996 held in Treasury).........         156          155
  Common Stock,Class B,$.01 par value-authorized
    13,000,000 shares; issued 8,100,686 shares
    (including 345,874 shares held in Treasury)......          81           82
  Paid in Capital....................................      33,935       33,935
  Retained Earnings (Note 7).........................     157,779      164,749
  Treasury Stock - at cost...........................     (13,189)      (5,299)
                                                      ------------  ------------
      Total Stockholders' Equity.....................     178,762      193,622
                                                      ------------  ------------
Total Liabilities and Stockholders' Equity...........    $637,082     $614,111
                                                      ============  ============
See notes to consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)

                                                        Year Ended
                                               -------------------------------
                                               October    October    October
                                               31, 1997   31, 1996   31, 1995
                                               ---------  ---------  ---------
<S>                                            <C>        <C>        <C>        
Revenues:
  Homebuilding:
    Sale of homes............................. $731,807   $764,682   $740,481
    Land sales and other revenues.............   26,983     18,612     15,398
                                               ---------  ---------  ---------
      Total Homebuilding......................  758,790    783,294    755,879
  Financial Services..........................   10,735     11,216     10,348
  Investment Properties.......................   13,757     10,919      9,531
  Collateralized Mortgage Financing...........      854      2,035      1,987
                                               ---------  ---------  ---------
      Total Revenues..........................  784,136    807,464    777,745
                                               ---------  ---------  ---------
Expenses:
  Homebuilding:
    Cost of sales.............................  634,317    651,492    624,395
    Selling, general and administrative.......   62,475     60,704     59,914
    Inventory impairment loss (Note 10).......   14,019      1,608      2,780
                                               ---------  ---------  ---------
      Total Homebuilding......................  710,811    713,804    687,089
                                               ---------  ---------  ---------
  Financial Services..........................   10,780     10,669     11,571
                                               ---------  ---------  ---------
  Investment Properties:
    Operations................................    5,909      6,388      6,135
    Provision for impairment loss.(Note 10)...   14,446
                                               ---------  ---------  ---------
      Total Investment Properties.............   20,355      6,388      6,135
                                               ---------  ---------  ---------
  Collateralized Mortgage Financing...........      878      2,076      2,173
                                               ---------  ---------  ---------
  Corporate General and Administration(Note 2)   15,088     14,002     13,002
                                               ---------  ---------  ---------
  Interest....................................   35,775     32,157     30,744
                                               ---------  ---------  ---------
  Other operations............................    2,573      3,362      5,377
                                               ---------  ---------  ---------
      Total Expenses..........................  796,260    782,458    756,091
                                               ---------  ---------  ---------
Income(Loss) Before Income Taxes..............  (12,124)    25,006     21,654
                                               ---------  ---------  ---------
State and Federal Income Taxes:
  State (Note 9)..............................    1,796      1,336      2,306
  Federal (Note 9)............................   (6,950)     6,383      5,220
                                               ---------  ---------  ---------
    Total Taxes...............................   (5,154)     7,719      7,526
                                               ---------  ---------  ---------
Net Income (Loss)............................. $ (6,970)  $ 17,287   $ 14,128
                                               =========  =========  =========
Earnings (Loss)Per Common Share (Note 1)......   $(0.31)     $0.75      $0.61
                                               =========  =========  =========

See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
                                 A Common Stock       B Common Stock
                              -------------------  -------------------
                                Shares               Shares
                              Issued and            Issued and          Paid-In  Retained   Treasury
                              Outstanding  Amount  Outstanding  Amount  Capital  Earnings    Stock     Total
                              -----------  ------  -----------  ------  -------  --------   --------  ---------
<S>                           <C>          <C>     <C>          <C>     <C>      <C>        <C>       <C>    
Balance, October 31, 1994...   14,730,299     149    8,291,754      88   33,858   133,334   (5,299)    162,130

Sale of common stock under
  employee stock option plan       15,000                                    77                             77
Conversion of Class B to
  Class A common stock......      293,184       5     (293,184)     (5)
Net Income..................                                                       14,128               14,128
                              -----------  ------  -----------  ------  -------  --------  ---------  ---------
Balance, October 31, 1995...   15,038,483     154    7,998,570      83   33,935   147,462   (5,299)    176,335

Conversion of Class B to
  Class A common stock......       96,865       1      (96,865)     (1)
Net Income..................                                                       17,287               17,287
                              -----------  ------  -----------  ------  -------  --------  ---------  ---------
Balance, October 31, 1996...   15,135,348    $155    7,901,705     $82  $33,935  $164,749  ($5,299)   $193,622

Conversion of Class B to
  Class A common stock......      146,893       1     (146,893)     (1)
Treasury stock purchases....   (1,184,400)                                                  (7,890)     (7,890)
Net Loss....................                                                       (6,970)              (6,970)
                              -----------  ------  -----------  ------  -------  --------  ---------  ---------
Balance, October 31, 1997...   14,097,841    $156    7,754,812     $81  $33,935  $157,779 ($13,189)   $178,762
                              ===========  ======  ===========  ======  =======  ========  =========  =========

See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
                                                        Year Ended
                                              ----------------------------------
                                              October     October     October
                                              31, 1997    31, 1996    31, 1995
                                              ----------  ----------  ----------
<S>                                           <C>         <C>         <C>
Cash Flows From Operating Activities:
  Net Income (Loss).......................... $  (6,970)  $  17,287   $  14,128
  Adjustments to reconcile net income (loss) to
     net cash provided by (used in) operating
     activities:
      Depreciation...........................     5,032       5,246       4,095
      Loss (gain)on sale and retirement of
        property and assets..................    (4,760)     (1,998)        875
      Deferred income taxes..................    (4,568)       (820)      1,786
      Impairment losses......................    28,465       1,608       2,780
      Decrease (increase) in assets:
        Escrow cash..........................     2,592      (2,129)       (654)
        Receivables, prepaids and other assets   (6,830)     (4,297)     (2,929)
        Mortgage notes receivable............     2,858     (10,966)    (21,432)
        Inventories..........................   (48,105)     26,498     (20,653)
      Increase (decrease) in liabilities:
        State and Federal income taxes.......    (7,325)      6,509       4,536
        Customers' deposits..................    10,007         774        (470)
        Interest and other accrued liabilities    3,726      (3,366)      4,873
        Post development completion costs....    (8,746)      4,062      (3,557)
        Accounts payable.....................     5,034      (3,681)      4,472
          Net cash provided by (used in)      ----------  ----------  ----------
          operating activities...............   (29,590)     34,727     (12,150)
                                              ----------  ----------  ----------
Cash Flows From Investing Activities:
  Net proceeds from sale of property and assets  14,997      10,308       1,046
  Purchase of property.......................    (3,156)     (5,882)     (8,106)
  Investment in and advances to unconsolidated
    affiliates...............................       195       3,792         200
  Investment in income producing properties..   (11,099)     (2,134)     (4,858)
          Net cash provided by (used in)      ----------  ----------  ----------
          investing activities...............       937       6,084     (11,718)
                                              ----------  ----------  ----------
Cash Flows From Financing Activities:
  Proceeds from mortgages and notes.......... 1,139,780   1,142,106     944,284
  Principal payments on mortgages and notes..(1,101,969) (1,188,449)   (931,254)
  Principal payments on subordinated debt....   (10,000)
  Investment in mortgage notes receivable....     1,474       8,941       8,138
  Purchase of treasury stock.................    (7,890)
  Proceeds from sale of stock................                                77
          Net cash used in (provided by)      ----------  ----------  ----------
          financing activities...............    21,395     (37,402)     21,245
                                              ----------  ----------  ----------
Net Increase (Decrease) In Cash.............     (7,258)      3,409      (2,623)
Cash Balance, Beginning Of Period............    15,323      11,914      14,537
                                              ----------  ----------  ----------
Cash Balance, End Of Period.................. $   8,065   $  15,323   $  11,914
                                              ==========  ==========  ==========
Supplemental Disclosures Of Cash Flow:
  Cash paid during the year for:
    Interest (net of amount capitalized)..... $  35,869   $  32,194   $  30,128
    Income Taxes.............................     6,809       6,875       1,192
                                              ----------  ----------  ----------
                                              $  42,678   $  39,069   $  31,320
                                              ==========  ==========  ==========
See notes to consolidated financial statements.
</TABLE>

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEARS ENDED OCTOBER 31, 1997, 1996, AND 1995.

1.  SUMMARY OF ACCOUNTING POLICIES

     Operations - The Company, a Delaware Corporation, principally develops
housing communities in New Jersey, Pennsylvania, New York, Florida, North
Carolina, Virginia, and California.  In addition, the Company has recently
started building in Poland.  The Company also develops and operates income
producing properties but plans an orderly exit from this business.

     Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of the Company and all wholly-owned or majority
owned subsidiaries after elimination of all significant intercompany balances
and transactions.  The Company's investments in joint ventures in which the
Company's interest is 50% or less are accounted for by the equity method of
accounting.

     Organizational Restructuring - During the fiscal years ended October 31,
1996 and October 31, 1995, the Company recorded a $0.3 million and $1.3 million
charge, respectively, for the cost of consolidating operations, writing off of
certain assets, and associate severance payments.  The charges for these fiscal
years were associated with consolidating certain common functions in the New
Jersey, Pennsylvania, Florida, and California building divisions.  This
consolidation effort is designed to reduce redundant costs and improve the
Company's operating efficiency in these regions.

     Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those estimates
and these differences could have a significant impact on the financial
statements.

     Income Recognition - Income from sales is recorded when title is conveyed
to the buyer, subject to the buyer's financial commitment being sufficient to
provide economic substance to the transaction.

     Cash - Cash includes cash deposited in checking accounts, overnight
repurchase agreements, certificates of deposit, Treasury bills and government
money market funds.

     Fair Value of Financial  Instruments - The fair value of financial
instruments is determined by reference to various market data and other
valuation techniques as appropriate.  The Company's financial instruments
consist of cash equivalents, mortgages and notes receivable, mortgages and notes
payable, and the subordinated notes payable.  Unless otherwise disclosed, the
fair value of financial instruments approximates their recorded values.

     Inventories - For inventories of communities under development, a loss is
recorded when events and circumstances indicate impairment and the undiscounted
future cash flows generated are less than the related carrying amounts.  The
impairment loss is based on expected revenue, cost to complete including
interest, and selling costs.  Inventories and long-lived assets held for sale
are recorded at the lower of cost or fair value less selling costs.  Fair value
is defined in Statement of Financial Accounting Standard No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
("FAS 121") as the amount at which an asset could be bought or sold in a current
transaction between willing parties, that is, other than in a forced or
liquidation sale.  Construction costs are accumulated during the period of
construction and charged to cost of sales under specific identification methods.
Land, land development, and common facility costs are amortized based upon the
number of homes to be constructed in each housing community utilizing a relative
sales value allocation method.

     Interest costs related to properties in progress are capitalized during the
construction period and expensed along with the associated cost of sales as the
related inventories are sold (see Note 6).

     The cost of land options is capitalized when incurred and either included
as part of the purchase price when the land is acquired or charged to operations
when the Company determines it will not exercise the option.

     Property - Rental operations of the Company arise primarily from rental of
commercial properties.  In addition, the Company has from time to time rented
under short-term leases condominium homes, not yet under contract of sale.  Such
homes are reclassified from inventory and depreciated after a reasonable selling
period not to exceed one year.

     Post Development Completion Costs - In those instances where a development
is substantially completed and sold and the Company has additional construction
work to be incurred, an estimated liability is provided to cover the cost of
such work.

     Deferred Income Tax - Deferred income taxes or income tax benefits are
provided for temporary differences between amounts recorded for financial
reporting and for income tax purposes.

     Common Stock - Each share of Class A Common Stock entitles its holder to
one vote per share and each share of Class B Common Stock entitles its holder
to ten votes per share.  The amount of any regular cash dividend payable on
a share of Class A Common Stock will be an amount equal to 110% of the
corresponding regular cash dividend payable on a share of Class B Common
Stock.  If a shareholder desires to sell shares of Class B Common Stock,
such stock must be converted into shares of Class A Common Stock.

     On December 16, 1996, the Company's Board of Directors approved a stock
repurchase plan of up to 2 million shares, equal to 8.7% of the Company's total
and outstanding shares as of that date.  As of October 31, 1997, 1,184,400
shares were repurchased under this program.

     Depreciation - The straight-line method is used for both financial and tax
reporting purposes for all assets except office furniture and equipment which
are depreciated using the declining balance method over their estimated useful
lives.

     Prepaid Expenses - Prepaid expenses which relate to specific housing
communities (marketing materials, model setup, architectural fees, homeowner
warranty, etc.) are amortized to costs of sales as the applicable inventories
are sold.  All other prepaid expenses are amortized over a specific time period
or as used and charged to overhead expense.

     Stock Options - Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation" establishes a fair value based method
of accounting for stock-based compensation plans, including stock options.
Registrants may elect to continue accounting for stock option plans under
Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued to Employees," but are required to provide proforma net income and
earnings per share information "as if" the new fair value approach had been
adopted.  The Company intends to continue accounting for its stock option plan
under APB 25.  Under APB 25, no compensation expense was recognized because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant (see Note 10).

     Per Share Calculations - Per share amounts are calculated on a weighted
average basis.

     New Accounting Pronouncement - Statement of Financial Accounting Standards
No. 128 ("FAS 128") "Earnings Per Share" requires the presentation of basic
earnings per share and diluted earnings per share, and is effective for annual
periods ending after December 15, 1997.  At October 31, 1997 the Company has
not adopted FAS 128.  When adopted basic earnings per share will equal the
Company's current calculation.  Diluted earnings per share will include
outstanding stock options in the calculation.

     New Accounting Pronouncement - Statement of Financial Accounting Standards
No. 131  ("FAS 131") "Disclosures About Segments of an Enterprise and Related
Information" requires disclosure about operating segments and is effective for
fiscal years beginning after December 15, 1997.  At October 31, 1997 the Company
has not adopted FAS 131.  The Company does not believe the requirements of FAS
131 will require additional disclosures in its financial statements.


2.  CORPORATE INITIATIVES

     The Company has embarked on long term improvement initiatives of total
quality, process redesign, and training.  Included in Corporate General and
Administration is $2,216,000, $1,601,000, and $1,987,000 for the years ended
October 31, 1997, 1996, and 1995, respectively.


3.  PROPERTY

     Homebuilding property, plant, and equipment consists of land, land
improvements, buildings, building improvements, furniture and equipment used by
the Company and its subsidiaries to conduct day to day business.  Homebuilding
accumulated depreciation related to these assets at October 31, 1997 and
October 31, 1996 amounted to $15,338,000 and $14,970,000, respectively.
Rental property consists of two office buildings, three office warehouse
facilities, one retail shopping center, and two senior citizen rental
communities in New Jersey. Except for the two senior rentals all other
rental property was reclassified from held for investment to held for sale
(see Note 10).  Accumulated depreciation on rental property at October 31,
1997 and October 31, 1996 amounted to $10,450,000 and $11,108,000,
respectively.  In November 1997, the two office buildings and three office
warehouse facilities with a book value of $19,585,000 at October 31, 1997
were sold for $24,700,000.  In October 1997, the Company sold a retail
center with a book value of $9,836,000 at the time of sale and recorded a
gain of $4,883,000.  In January of 1996, the Company sold a retail center
with a book value of $8,022,000 and recorded a gain of $1,998,000.


4.  ESCROW CASH

     The Company holds escrow cash amounting to $3,248,000 and $5,840,000 at
October 31, 1997 and October 31, 1996, respectively, which primarily represents
customers' deposits which are restricted from use by the Company.  The Company
is able to release escrow cash by pledging letters of credit.  At October 31,
1997 and October 31, 1996, $13,500,000 and $5,163,000 was released from escrow
and letters of credit were pledged, respectively.  Escrow cash accounts are
substantially invested in short-term certificates of deposit or time deposits.


5.  MORTGAGES AND NOTES RECEIVABLE

     The Company's wholly-owned mortgage banking subsidiary originates mortgage
loans, primarily from the sale of the Company's homes.  Such mortgage loans are
sold in the secondary mortgage market servicing released or prior to February
28, 1987 pledged against collateralized mortgage obligations ("CMO's"). At
October 31, 1997 and October 31, 1996, respectively, $47,660,000 and
$57,095,000 of such mortgages were pledged against the Company's mortgage
warehouse line (see "Notes to Consolidated Financial Statements - Note 6"). 
The Company may incur risk with respect to mortgages that are delinquent and
not pledged against CMO's, but only to the extent the losses are not covered
by mortgage insurance or resale value of the home.  Historically, the
Company has incurred minimal credit losses.  The mortgage loans held for 
sale are carried at the lower of cost or market value, determined on an
aggregate basis.  There was no valuation adjustment at October 31, 1997.

6.  MORTGAGES AND NOTES PAYABLE

     Substantially all of the nonrecourse land mortgages are short-term
borrowings.  Nonrecourse mortgages secured by operating and rental property are
installment obligations having annual principal maturities in the following
years ending October 31, of approximately $16,468,000 in 1998 (including
November 1997 sales per "Notes to Consolidated Financial Statement - Note 3"),
$142,000 in 1999, $5,586,000 in 2000, $58,000 in 2001, $3,000 in 2002, and
$814,000 after 2002.  The interest rates on these obligations range from 8.125%
to 9.125%.

     The Company has an unsecured Revolving Credit Agreement ("Agreement") with
a group of banks which provides up to $245,000,000 through March 2000.
Interest is payable monthly and at various rates of either prime plus 1/8% or
LIBOR plus 1.625%.  In addition, the Company pays 3/8% per annum on the
weighted average unused portion of the line.

       Interest costs incurred, expensed and capitalized were:

                                             Year Ended
                                    ----------------------------
                                    October   October   October
                                    31, 1997  31, 1996  31, 1995
                                    --------  --------  --------
                                      (Dollars in Thousands)
Interest incurred (1):
  Residential(3).................   $29,469   $30,058   $32,257
  Commercial(4)..................     5,308     5,493     5,571
                                    -------   -------   -------
  Total incurred.................   $34,777   $35,551   $37,828
                                    =======   =======   =======
Interest expensed:
  Residential(3).................   $30,467   $26,649   $25,441
  Commercial(4)..................     5,308     5,508     5,303
                                    -------   -------   -------
  Total expensed.................   $35,775   $32,157   $30,744
                                    =======   =======   =======
Interest capitalized at
  beginning of year..............   $39,152   $36,182   $29,480
Plus interest incurred...........    34,777    35,551    37,828
Less interest expensed...........    35,775    32,157    30,744
Less impairment adjustments......       275       424       382
Less property written off........       945        --        --
Less sale of assets..............       984        --        --
                                    -------   -------   -------
Interest capitalized at
  end of year....................   $35,950   $39,152   $36,182
                                    =======   =======   =======
Interest capitalized at
  end of year (5):
  Residential(3).................   $29,804   $32,669   $29,684
  Commercial(2)..................     6,146     6,483     6,498
                                    -------   -------   -------
   Total interest
   capitalized...................   $35,950   $39,152   $36,182
                                    =======   =======   =======

(1)  Data does not include interest incurred by the Company's mortgage  and
     finance subsidiaries.
(2)  Data does not include a reduction for depreciation.
(3)  Represents acquisition interest for construction, land and development
     costs which is charged to interest expense when land is not under active
     development and when homes are delivered.
(4)  Represents interest allocated to or incurred on long term debt for
     investment properties and charged to interest expense.
(5)  Commercial interest for October 31, 1997 includes $832,000 reported at
     October 31, 1996 as capitalized residential interest.  This
     reclassification was the result of the transfer of two parcels of
     land and related capitalized interest from homebuilding to investment
     properties.

     Average interest rates and average balances outstanding for short-term debt
are as follows:

                              October     October     October
                              31, 1997    31, 1996    31, 1995
                              --------    --------    --------
                                  (Dollars In Thousands)

Average outstanding
  borrowings................. $133,760    $127,770    $160,029
Average interest rate during
  period.....................     8.2%        8.5%        8.7%
Average interest rate at end
  of period(1)...............     7.8%        7.6%        8.0%
Maximum outstanding at any
  month end.................. $184,550    $157,125    $187,050

(1) Average interest rate at the end of the period excludes any charges on
    unused loan balances.


7.  SUBORDINATED NOTES

     On April 29, 1992, the Company issued $100,000,000 principal amount of 11
1/4% Subordinated Notes due April 15, 2002.  Interest is payable semi-annually.
In November and December 1996 the Company purchased $10,000,000 principal amount
at an average price of 100.3% of par.  Annual sinking fund payments of
$10,000,000 and $20,000,000 are required in April 2000 and 2001, respectively,
with the balance due April 2002.

     On June 7, 1993, the Company issued $100,000,000 principal amount of
9 3/4% Subordinated Notes due June 1, 2005.  Interest is payable semiannually.
The notes are redeemable in whole or in part at the Company's option, initially
at 104.875% of their principal amount on or after June 1, 1999 and reducing to
100% of their principal amount on or after June 1, 2002.

     The indentures relating to the subordinated notes and the Revolving Credit
Agreement contain restrictions on the payment of cash dividends.  At
October 31, 1997, $41,578,000 of retained earnings were free of such
restrictions.

     The fair value of the Subordinated Notes is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities.  The combined fair value
of the Subordinated Notes is estimated at $203,250,000 as of October 31, 1997.


8.  RETIREMENT PLAN

     In  December  1982, the Company established a defined contribution savings
and investment retirement plan.  Under such plan there are no prior service
costs.  All associates with over one year of service are eligible to
participate in the retirement plan and employer contributions are based on a
percentage of associate contributions.  Plan costs charged to operations
amount to $1,520,000, $1,406,000, and $1,028,000 for the years ended
October 31, 1997, 1996, and 1995, respectively.



9.  INCOME TAXES

     Income Taxes payable (receivable) including deferred benefits, consists of
the following:

                                              October      October
                                              31, 1997     31, 1996
                                              ---------    ---------
                                                  (In Thousands)

State income taxes:
  Current.................................... $  1,387     $    251
  Deferred...................................   (1,586)      (1,337)
Federal income taxes:
  Current....................................   (1,611)       6,601
  Deferred...................................  (10,755)      (6,187)
                                              ---------    ---------
    Total.................................... $(12,565)    $   (672)
                                              =========    =========

     Deferred income taxes have been provided (reduced) due to temporary
differences as follows:

                                            Year Ended
                                    ----------------------------
                                    October   October   October
                                    31, 1997  31, 1996  31, 1995
                                    --------  --------  --------
                                           (In Thousands)

Capitalized interest................$   (54)  $  (152)  $    (2)
Homeowner association maintenance
  reserves..........................   (168)      275       (53)
Installment sales...................    (34)      (52)      (59)
Provision to reduce inventory to
  net realizable value..............   (174)     (563)     1,665
Inventory impairment loss........... (6,786)    1,710      (973)
Deferred expenses...................   (479)   (1,312)        8
Depreciation........................    (82)      219       316
Post development completion costs...  3,129    (1,198)      352
Net operating losses................                         33
Other...............................   (175)     (182)       65
Low income housing tax credit.......                        434
                                    --------  --------  --------
Benefit (Provision) - total.........$(4,823)  $(1,255)  $ 1,786
                                    ========  ========  ========

     The deferred tax liabilities or assets have been recognized in the
consolidated balance sheets due to temporary differences as follows:

                                    October   October
                                    31, 1997  31, 1996
                                    --------  ---------
                                      (In Thousands)
Deferred Tax Liabilities:
  Deferred interest............     $    31    $    85
  Installment sales............         208        242
  Accelerated depreciation.....       2,058      2,137
                                    --------   --------
   Total.......................       2,297      2,464
                                    --------   --------
Deferred Tax Assets:
  Deferred income..............         321        321
  Maintenance guarantee reserves        481        313
  Provision to reduce inventory to
    net realizable value.......          95      1,600
  Inventory impairment loss....       8,621        563
  Uniform capitalization of
    overhead...................       3,972      3,055
  Post development completion
  costs........................         509      2,972
  Other........................         640      1,164
                                    --------   --------
    Total......................      14,639      9,988
                                    --------   --------
Net Deferred Tax Assets........    $(12,342)   $(7,524)
                                    ========   ========

     The effective tax rates varied from the expected rate.  The sources of
these differences were as follows:

                                              Year Ended
                                     ------------------------------
                                     October    October    October
                                     31, 1997   31, 1996   31, 1995
                                     --------   --------   --------

Computed "expected" tax rate......    (35.0)%    35.0%      35.0%
State income taxes, net of Federal
  income tax benefit..............     11.6%      3.2%       6.9%
Company owned life insurance......     (6.2)%    (2.9)%     (4.4)%
Low income housing tax credit.....    (11.2)%    (5.3)%     (4.2)%
Other.............................     (1.9)%      .9%       1.5%
                                     --------   --------   --------
Effective tax rate................    (42.7)%    30.9%      34.8%
                                     ========   ========   ========

     The Company has state net operating loss carryforwards for financial
reporting and tax purposes of $296,000,000 due to expire between the years
October 31, 1998 and October 31, 2013.


10.  REDUCTION OF INVENTORY TO FAIR VALUE

     In accordance with FAS 121, the Company records impairment losses on
inventories related to communities under development when events and
circumstances indicate that they may be impaired and the undiscounted cashflows
estimated to be generated by those assets are less than their related carrying
amounts. As of October 31, 1997, 1996 and 1995, inventory with a carrying
amount of $33,143,000, $2,240,000 and $10,701,000, respectively, was written
down by $9,258,000, $1,289,000 and $4,142,000, respectively, to its fair
value.  This was based on the Company's evaluation of the expected revenue,
cost to complete including interest and selling cost.  The writedowns during
the year ended October 31, 1997 were attributable to numerous communities in
Florida where the Company is reducing its investment and two communities in New
Jersey resulting from a product type change and unforeseen development costs. 
The writedowns during the years ended October 31, 1996 and October 31, 1995
were primarily attributable to one community in New York,  one in New Jersey,
two in Florida and four communities in Metro Washington, D.C.

     Also in accordance with FAS 121,  the Company records impairment losses on
inventories and long lived assets held for sale when the related carrying
amount exceeds the fair value less the selling cost. As of October 31, 1997,
1996 and 1995, inventory and commercial properties with a carrying amount of
$32,008,000, $12,031,000 and $18,956,000, respectively, was written down by
$12,690,000, $3,795,000 and $5,492,000, respectively, to its fair value. 
The writedowns during the year ended October 31, 1997 were attributable to
four residential parcels of land in Florida, one residential parcel of land
in New Jersey, one multi-use commercial parcel of land in New Jersey and two
Florida commercial facilities with expansion land attached to one facility.
The writedowns during the years ended October 31, 1996 and October 31, 1995
were attributable to land held for sale in New Jersey, Pennsylvania, Metro
Washington, D.C. and Florida. During the years ended October 31, 1997 and
1996, of the land parcels liquidated,  the Company recovered the carrying
value or recognized insubstantial losses on the land held for sale.

     The total aggregate impairment losses, which are presented in the
consolidated statements of operations, on the inventory held for development
and the land or commercial facilities held for sale were $21,948,000,
$1,608,000, and $2,780,000 for the years ended October 31, 1997, 199,6 and
1995, respectively.

     On the statement of operations for the year ended October 31, 1997 the
lines entitled "Homebuilding - Inventory impairment loss" and "Investment
Properties - Provision for impairment loss" also include writeoffs of four
options in New Jersey including approval, engineering and capitalized interest
costs amounting to $4,761,000 and $1,756,000, respectively.  In the case of the
three residential properties, the Company decided not to exercise the option due
to environmental problems or the property's proforma did not produce an adequate
return on investment commensurate with the risk.  The one commercial property
option was not exercised because an anchor tenant with an acceptable credit
rating could not be found.


11.  TRANSACTIONS WITH RELATED PARTIES

     The Company's Board of Directors has adopted a general policy providing
that it will not make loans to officers or directors of the Company or their
relatives at an interest rate less than the interest rate at the date of the
loan on six month U.S. Treasury Bills, that the aggregate of such loans will
not exceed $2,000,000 at any one time, and that such loans will be made only
with the approval of the members of the Company's Board of Directors who have no
interest in the transaction.  At October 31, 1997 and 1996 related party
receivables from officers and directors amounted to $1,889,000 and
$1,908,000, respectively.  Notwithstanding the policy stated above, the
Board of Directors of the Company concluded that the following transactions
were in the best interests of the Company.

     The Company provides property management services to various limited
partnerships including one partnership in which Mr. A. Hovnanian, President and
a Director of the Company, is a general partner, and members of his family and
certain officers and directors of the Company are limited partners.  At October
31, 1997, no amounts were due the Company by these partnerships.


12.  STOCK OPTION PLAN

     The Company has a stock option plan for certain officers and key
employees. Options are granted by a Committee appointed by the Board of
Directors.  The exercise price of all stock options must be at least equal
to the fair market value of the underlying shares on the date of the grant. 
These options vest in three equal installments on the first, second, and
third anniversaries of the date of the grant and expire after ten years. 
In addition, during the year ended October 31, 1997 each of the three
outside directors of the Company were granted options to purchase 5,000
shares at the same price and terms as those granted to officers and key
employees.  Stock option transactions are summarized as follows:

                                 Weighted           Weighted           Weighted
                                 Average            Average            Average
                       October   Exercise October   Exercise October   Exercise
                       31, 1997   Price   31, 1996   Price   31, 1995   Price
                       --------- -------- --------- -------- --------- --------

Options outstanding at
  beginning of period. 1,156,000  $8.04   1,176,000   $8.00    938,500   $8.59
   Granted............   190,500  $6.47          --            270,000   $5.81
   Exercised..........        --                 --             15,000   $5.13
   Cancelled..........    10,000  $5.81      20,000   $5.81     17,500   $8.25
                       ---------          ---------          ---------
Options outstanding at
  end of period....... 1,336,500  $7.83   1,156,000   $8.04  1,176,000   $8.00
                       =========          =========          =========

Options exercisable at
  end of period....... 1,069,333            996,000            748,667
Price range of options     $5.13-             $5.13-             $5.13-
  outstanding.........    $11.50             $11.50             $11.50
Weighted-average
  contractual life....  5.4 yrs.            5.8 yrs.           6.8 yrs.

     Pro forma information regarding net income and earnings per share is
required under the fair value method of Financial Accounting Standards No. 123
("FAS 123") "Accounting for Stock-Based compensation" and is to be calculated
as if the Company had accounted for its stock options under the fair value
method of FAS 123.  The fair value for these options is established at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 1997:  risk- free interest rate of 5.8%;
divided yield of zero; volatility factor of the expected market price of the
Company's common stock of 0.47; and a weighted-average expected life of
the option of 7.0 years.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable.  In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility.  Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective imput assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period.  The
Company's pro forma information follows (in thousands except for earnings
per share information):
                                              Year Ended
                                         -----------------------
                                         October      October
                                         31, 1997     31, 1996(1)
                                         ----------   -----------

Pro forma net income (loss)............. $ (7,131)    $ 17,287
                                         ==========   ===========
Pro forma earnings (loss) per share..... $  (0.32)    $   0.75
                                         ==========   ===========

(1) No options were granted in 1996, as a result pro forma amounts equal actual
per the income statement.

13.  COMMITMENTS AND CONTINGENT LIABILITIES

     During fiscal 1989, the Company became aware that certain fire-retardant
plywood commonly used in the roof construction of multi-family homes may
contain a product defect causing accelerated deterioration of the plywood. 
The Company has determined that such plywood was used principally in 33 of its
communities containing approximately 11,750 homes.

     Common areas, including roofs, in each of the Company's multi-family
condominium developments are governed and controlled by homeowners'
associations for each development, rather than by individual homeowners. 
Certain of the 33 homeowners' associations in the affected developments have
asserted claims against the Company.  As of October 31, 1994, the Company had
entered separate settlement agreements with 31 of the 33 associations, (the
"Settling Associations") covering 10,850 homes.  In December 1994, the
Company entered into a settlement agreement with the two remaining
associations on substantially the same terms as the earlier settlements.

     In August 1989 the Company brought suit against the plywood material
manufacturers, treaters, suppliers and others (the "Defendants") to determine
the proper responsibility for damages, to protect its interests and to recover
its damages.

     In November 1992, the Company and the Settling Associations entered into a
settlement agreement with most of the Defendants.  Based upon the settlement
monies received, the use of the Settling Associations' roof shingle reserves
and the actual expenditures in performing the repairs, the Company believes
the repair costs will not require it to set aside future reserves for such
roof repairs.

     In addition, the Company is involved from time to time in litigation
arising in the ordinary course of business, none of which is expected to have a
material adverse effect on the Company.

     As of October 31, 1997 and 1996, respectively, the Company is obligated
under various performance letters of credit amounting to $6,834,000 and
$8,433,000.


14.  UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY INFORMATION

     Summarized quarterly financial information for the years ended October 31,
1997, 1996, and 1995 is as follows:

                                               Three Months Ended
                                    ------------------------------------------
                                    October      July       April    January
                                    31, 1997   31, 1997   30, 1997   31, 1997
                                    --------   --------   --------   ---------
                                       (In Thousands Except Per Share Data)

Revenues........................... $315,150   $205,107   $143,526   $120,353
Expenses........................... $302,494   $196,105   $173,453   $124,208
Income (loss) before income taxes.. $ 12,656   $  9,002   $(29,927)  $ (3,855)
State and Federal income tax....... $  4,930   $  2,782   $(10,785)  $ (2,081)
Net income (loss).................. $  7,726   $  6,220   $(19,142)  $ (1,774)
Earnings per common share.......... $   0.35   $   0.27   $  (0.83)  $   (0.8)
Weighted average number of
  common shares outstanding........   22,098     22,409     22,925     23,037

                                              Three Months Ended
                                    -----------------------------------------
                                    October      July      April    January
                                    31, 1996   31, 1996  30, 1996   31, 1996
                                    --------   --------  --------   ---------
                                       (In Thousands Except Per Share Data)

Revenues........................... $342,049   $195,812  $152,464   $117,139
Expenses........................... $323,474   $191,280  $150,881   $116,823
Income before income taxes......... $ 18,575   $  4,532  $  1,583   $    316
State and Federal income tax....... $  6,146   $  1,422  $    335   $   (184)
Net income......................... $ 12,429   $  3,110  $  1,248   $    500
Earnings per common share.......... $   0.54   $   0.13  $   0.06   $   0.02
Weighted average number of
  common shares outstanding........   23,037     23,037    23,037     23,037

                                              Three Months Ended
                                    -----------------------------------------
                                    October      July      April    January
                                    31, 1995   31, 1995  30, 1995   31, 1995
                                    --------   --------  --------   ---------
                                       (In Thousands Except Per Share Data)

Revenues........................... $331,712   $173,153  $147,284   $125,596
Expenses........................... $314,650   $170,082  $146,551   $124,808
Income before income taxes......... $ 17,062   $  3,071  $    733   $    788

State and Federal income tax....... $  6,432   $    986  $     54   $     54
Net income......................... $ 10,630   $  2,085  $    679   $    734
Earnings per common share.......... $   0.46   $   0.09  $   0.03   $   0.03
Weighted average number of
  common shares outstanding........   23,037     23,037    23,032     23,022

<TABLE>
SCHEDULE VIII
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>

                     BALANCE     CHARGED TO                          CHARGED TO             BALANCE
                     FEB. 28,    COSTS AND    DEDUCTIONS  DESCRIP-    OTHER      DESCRIP-   FEB 28,
DESCRIPTION            1993      EXPENSES                   TION     ACCOUNTS      TION        1994
- ------------------- -----------  ----------   ----------  ---------  ----------  ---------- -----------
<S>                 <C>          <C>          <C>         <C>        <C>         <C>        <C>
Land and land
  development costs $ 6,436,000               $3,164,000  Closings   $2,091,000  Reclass    $ 5,363,000
Land, land options
  and costs of comm.
  in planning         4,846,000                                      (2,091,000) Reclass      2,755,000
Rental property       2,387,000                1,012,000  Closings                            1,375,000
Income producing
  property under
  development            98,000                                                                  98,000
                    -----------  ----------   ----------             ----------             -----------
                    $13,767,000               $4,176,000                     $0             $ 9,591,000
                    ===========  ==========   ==========             ==========             ===========

                     BALANCE     CHARGED TO                          CHARGED TO             BALANCE
                     FEB. 28,    COSTS AND    DEDUCTIONS  DESCRIP-    OTHER      DESCRIP-    OCT. 31,
DESCRIPTION            1994      EXPENSES                   TION     ACCOUNTS      TION        1994
- ------------------- -----------  ----------   ----------  ---------  ----------  ---------- -----------

Land and land
  development costs $ 5,363,000  $5,762,000   $3,370,000  Closings                          $ 7,755,000
Land, land options
  and costs of comm.
  in planning         2,755,000                1,123,000  Closings                            1,632,000
Rental property       1,375,000     595,000      716,000  Closings                            1,254,000
Income producing
  property under
  development            98,000                                                                  98,000
                    -----------  ----------   ----------             ----------             -----------
                    $ 9,591,000  $6,357,000   $5,209,000                                    $10,739,000
                    ===========  ==========   ==========             ==========             ===========


                     BALANCE     CHARGED TO                          CHARGED TO             BALANCE
                     OCT. 31,    COSTS AND    DEDUCTIONS  DESCRIP-    OTHER      DESCRIP-    OCT. 31,
DESCRIPTION            1994      EXPENSES                   TION     ACCOUNTS      TION        1995
- ------------------- -----------  -----------  ----------  ---------  ----------  ---------- -----------
Land and land
  development costs $ 7,755,000               $2,796,000  Closings   $4,959,000  FASB 121           $0
Land, land options
  and costs of comm.
  in planning         1,632,000                                       1,632,000  FASB 121            0
Rental property       1,254,000                1,089,000  Closings      165,000  FASB 121            0
Income producing
  property under
  development            98,000                                          98,000  FASB 121            0
                    -----------  -----------  ----------             ----------             -----------
                    $10,739,000               $3,885,000             $6,854,000                     $0
                    ===========  ===========  ==========             ==========             ===========
</TABLE>

SCHEDULE X
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INCOME STATEMENT INFORMATION


                                      Charged To Cost And Expenses
                                  -----------------------------------
                                    October     October     October
                                    31, 1997    31, 1996    31, 1995
                                  ----------- ----------- -----------

Advertising...................... $12,559,000 $11,513,000 $12,899,000
Depreciation..................... $ 5,175,000 $ 5,246,000 $ 4,095,000
Maintenance guarantee reserves... $ 1,609,000 $   682,000 $ 1,248,000

<TABLE>
SCHEDULE XI
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
OCTOBER 31, 1997
<CAPTION>

                           Gross Amounts (A)(B)(C)
                         ---------------------------
                                       Building/                  Tax     Accumulated
Description                  Land    Improvements    Total       Basis    Depreciation
- ------------------------ ----------- ------------ ----------- ----------- ------------
<S>                      <C>         <C>          <C>         <C>         <C>
 1 North Center Drive    $   636,000 $  7,396,000 $ 8,032,000 $ 7,738,000 $1,757,000
   North Brunswick, NJ
   Flex Building
 2 K.Hovnanian Corp.Center   541,000    4,054,000   4,595,000   5,773,000  1,447,000
   West Palm Beach, FL
   Office Building
 3 Hovnanian Corp.Center   1,000,000    4,785,000   5,785,000   5,602,000  1,432,000
   North Brunswick, NJ
   Retail
 4 Hovnanian Corp. Center    616,000    8,707,000   9,323,000   9,323,000  3,705,000
   North Brunswick, NJ
   Office/Warehouse
 5 Cypress Plaza           1,504,000    3,828,000   5,332,000   8,367,000    989,000
   Jacksonville, FL
   Retail Center
 6 Hidden Meadows            544,000    5,750,000   6,294,000   6,294,000    667,000
   Ocean Twp, NJ
   Senior Rentals
 7 North Brunswick V         238,000      216,000     454,000     930,000     30,000
   North Brunswick, NJ
   Retail/Land Under
   Development
 8 Norfolk Village           640,000    5,568,000   6,208,000   6,208,000    424,000
   Mahwah, NJ
   Senior Rentals
 9 Miscellaneous                   0        1,000       1,000       1,000          0
   New Jersey
   Leasehold Improvements
10 Hovnanian Corp. Center          0    9,127,000   9,127,000  12,143,000          0
   North Brunswick, NJ
   Land/Land Improvement
   Approval & Flex Building
   Under Construction
11 Land Improvement and
   Approval Costs
   Merrimack Commercial       75,000      100,000     175,000     300,000          0
   Merrimack, NH
   Land/Land Improvement
   Costs
12 Cypress Plaza             195,000      427,000     622,000   1,531,000          0
   Jacksonville, FL
   Land/Land Improvement
   and Approval Costs
13 North Brunswick V         210,000      785,000     995,000   1,760,000          0
   North Brunswick, NJ
   Retail/Land Under
   Development
14 NB Theatre                  3,000    1,250,000   1,253,000   4,192,000          0
   North Brunswick,NJ
   Land/Land
   Improvement
15 Allaire                    50,000       54,000     104,000     104,000          0
   Wall, NJ
   Land/Land Improvement
16 Wall Town Center        2,200,000      308,000   2,508,000   2,508,000          0
   Wall, NJ
   Land/Land Improvement
                         ----------- ------------ ----------- ----------- -----------
                         $ 8,452,000 $ 52,356,000 $60,808,000 $72,774,000 $10,451,000
                         =========== ============ =========== =========== ===========

(A) Fiscal Year Construction Completed:
    1 through 2 - 1987
    3 through 5 - 1990
    6 through 7 - 1993
    8 - 1995
    9 through 16 - not completed
(B) Depreciable Life:
    40 years - Depreciation expense was $1,854,000 for the year ended
    October 31, 1997.
    Depreciation expense was $2,665,000 for the year ended October 31, 1996.
    Depreciation expense was $1,973,000 for the year ended October 31, 1995.
    Depreciation expense was $1,175,000 for the eight months ended
    October 31, 1994.
(C) Items marked 11 through 19 consist of land improvement, building
    construction, and approval costs on land held for future development.

Balance - October 31, 1994                                      $ 79,260,000
     Additions:  Improvement                                         840,000
                 Construction                                      5,779,000
     Deletions:  Cost of rental condominiums sold                 (1,760,000)
                                                                 -------------
Balance - October 31, 1995                                        84,119,000
     Additions:  Improvements                                      1,115,000
     Deletions:  Cost of rental condominiums sold                   (152,000)
                 Cost of commercial center sold                   (8,457,000)
                 Cost of commercial land sold                       (114,000)
                 Cost of inventory sold                               (9,000)
                                                                 -------------
Balance - October 31, 1996                                         76,502,000
     Additions:   Improvements                                        193,000
                  Land purchase and development                    11,100,000
     Deletions:   Transfer to inventory                              (258,000)
                  Cost of commercial center sold                  (12,283,000)
                  Provision for impairment loss                   (14,446,000)
                                                                 -------------
Balance - October 31, 1997                                       $ 60,808,000
                                                                 =============

Balance at October 31, 1997 is reported on the consolidated balance sheet as
investment properties held for sale and held for investment.
</TABLE>


                           EXHIBIT 22
                       SUBSIDIARY LISTING
                                

K. Hovnanian Equities, Inc.
EXC, Inc.
K. Hovnanian Companies of North Carolina, Inc.
KHL, Inc.
Hovnanian Texas, Inc.
Hovnanian Georgia, Inc.
Hovnanian Financial Services III, Inc.
K. Hovnanian Mortgage USA, Inc.
Hovnanian Financial Services IV, Inc.
K. Hovnanian Developments of New Jersey, Inc.
KHE Finance, Inc.
K. Hov International, Inc.
Hovnanian Financial Services II, Inc.
New Fortis Investment
Hovnanian Financial Services I, Inc.
K. Hovnanian Enterprises, Inc.
Hovnanian Pennsylvania, Inc.
Recreational Development Co., Inc.
K. Hovnanian Marine, Inc.
K. Hovnanian Aviation, Inc.
K. Hovnanian Companies of North Jersey, Inc.
K. Hovnanian at Montville, Inc.
K. Hovnanian at Wayne, Inc.
K. Hovnanian at Mahwah IV, Inc
K. Hovnanian at Morris II, Inc.
K. Hovnanian at Mahwah II, Inc.
K. Hovnanian at Mahwah III, Inc.
K. Hovnanian @ Northern Westchester, Inc.
K. Hovnanian at Hanover, Inc.
K. Hovnanian at Montville II, Inc.
K. Hovnanian @ Newark Urban Renewal Corp.I, Inc.
K. Hovnanian @ Newark I, Inc.
K. Hovnanian @ Newark Urban Renewal Corp.II, Inc.
Jersey City Danforth CSO
K. Hovnanian @ Newark Urban Renewal Corp.III, Inc.
K. Hovnanian @ Newark Urban Renewal Corp. IV, Inc.
K. Hovnanian @ Newark Urban Renewal Corp. V, Inc.
K. Hovnanian at Jersey City I, Inc.
K. Hovnanian at Jersey City II, Inc.(Phase 2A)
K. Hovnanian at Jersey City III, Inc.
K. Hovnanian at Mahwah VI, Inc.
K. Hovnanian at Jersey City II, Inc.(Phase 2B)
K. Hovnanian at Mahwah VII, Inc.
K. Hovnanian at Montclair, N.J., Inc.
K. Hovnanian at Horizon Heights, Inc.
K. Hovnanian at Reservoir Ridge, Inc.
K. Hovnanian at Mahwah V, Inc.
K. Hovnanian at Mahwah VIII, Inc.
K. Hovnanian of North Jersey, Inc. (Hudson River)
Montego Bay I Acquisition Corp., Inc.
Montego Bay Associates Limited I, LP (MBAI)
Montego Bay II Acquisition Corp., Inc.
Montego Bay Associates Limited II, LP (MBAII)
0515 Co., Inc.
K. Hovnanian at North Brunswick IV, Inc.
K. Hovnanian Properties of North Brunswick IV, Inc.
Arrow Properties, Inc.
KHIPE, Inc.
Pine Brook Company, Inc.
K. Hovnanian Properties of North Brunswick II, Inc.
K. Hovnanian Properties of Galloway, Inc.
K. Hovnanian @ Cedar Grove I, Inc.
K. Hovnanian @ Cedar Grove II, Inc.
K. Hovnanian Properties of Piscataway, Inc.
K. Hovnanian Properties of North Brunswick I, Inc.
Molly Pitcher Renovations, Inc.
K. Hovnanian Properties of East Brunswick II,Inc.
K. Hovnanian Investment Properties of N.J., Inc.
K. Hovnanian Investment Properties, Inc.
Hovnanian Properties of Atlantic County, Inc.
K. Hovnanian Properties of Newark Urban Renewal Corporation, Inc.
K. Hovnanian Properties of Hamilton, Inc.
K. Hovnanian Properites of Franklin, Inc.
K. Hovnanian Properties of North Brunswick III, Inc.
K. Hovnanian Properties of Franklin II, Inc.
K. Hovnanian at Jacksonville, Inc.
K. Hovnanian Properties of North Brunswick V, Inc.
K. Hovnanian Properties of Wall, Inc.
K.Hovnanian at Pompano Beach, Inc.
Hovnanian Properties of Lake Worth, Inc.
Landarama, Inc.
K. Hovnanian Companies Northeast, Inc.
Parthenon Group
Minerva Group
K. Hovnanian Companies of Central Jersey, Inc.
K. Hovnanian Real Estate Investment, Inc.
K. Hovnanian at Princeton, Inc.
K. Hovnanian at South Brunswick III, Inc.
K. Hovnanian at South Brunswick IV, Inc.
K. Hovnanian at Plainsboro I, Inc.
K. Hovnanian at Plainsboro II, Inc.
K. Hovnanian at Klockner Farms, Inc.
K. Hovnanian at South Brunswick II, Inc.
K. Hovnanian at Hopewell III, Inc.
K. Hovnanian at Hopewell I, Inc.
K. Hovnanian at South Brunswick, Inc.
K. Hovnanian at East Windsor I, Inc.
K. Hovnanian at North Brunswick II, Inc.
K. Hovnanian at North Brunswick III, Inc.
K. Hovnanian at Hopewell II, Inc.
K. Hovnanian at Somerset VIII, Inc.
K. Hovnanian at Lawrence Square, Inc.
Dryer Associates, Inc.
K. Hovnanian at East Brunswick V, Inc.
K. Hovnanian at Bernards II, Inc.
K. Hovnanian at Bridgewater III, Inc.
K. Hovnanian at Plainsboro III, Inc.
K. Hovnanian at Somerset V, Inc.
K. Hovnanian at Somerset VI, Inc.
Eastern Title Agency, Inc.
K. Hovnanian Mortgage, Inc.
Governors Abstract
Eastern National Title Insurance Agency, Inc.
Founders Title Agency, Inc.
K. Hovnanian Companies North Central Jersey, Inc.
K. Hovnanian at Bedminster, Inc.
K. Hovnanian at Bridgewater IV, Inc.
K. Hovnanian at Branchburg III, Inc.
K. Hovnanian at Spring Ridge, Inc.
K. Hovnanian at Bridgewater V, Inc.
K. Hovnanian at Readington, Inc.
K. Hovnanian at Branchburg II, Inc.
K. Hovnanian at Bridgewater II, Inc.
K. Hovnanian at Branchburg I, Inc.
K. Hovnanian Companies Jersey Shore, Inc.
K. Hovnanian at Wall Township, Inc.
K. Hovnanian at Galloway VIII, Inc.
K. Hovnanian at Dover Township, Inc.
K. Hovnanian at Galloway VII, Inc.
K. Hovnanian at Tinton Falls II, Inc.
K. Hovnanian at Ocean Township, Inc.
K. Hovnanian at Wall Township II, Inc.
K. Hovnanian at Wall Township III, Inc.
K. Hovnanian at Holmdel Township, Inc.
K. Hovnanian at Wall Township IV, Inc.
K. Hovnanian at Wall Township V, Inc.
K. Hovnanian at Atlantic City, Inc.
K. Hovnanian at Ocean Township II, Inc.
K. Hovnanian at Ocean Township, Inc.
K. Hovnanian at Marlboro Township, Inc.
K. Hovnanian at Howell Township, Inc.
K. Hovnanian at Howell Township II, Inc.
K. Hovnanian at Woodbury Oaks, Inc.
K. Hovnanian at Freehold Township, Inc.
K. Hovnanian at Lakewood, Inc.
K. Hovnanian Companies of the Delaware Valley, Inc.
K. Hovnanian Co. of Delaware Valley, Inc. Brokerage Company
K. Hovnanian at Lower Saucon, Inc
K. Hovnanian at Perkiomen I, Inc.
K. Hovnanian at Montgomery I, Inc.
K. Hovnanian at Upper Merion, Inc.
K. Hovnanian at Perkiomen II, Inc.
K. Hovnanian Companies of South Jersey, Inc.
K. Hovnanian at Valleybrook, Inc.
Kings Grant Evesham Corp.
K. Hovnanian at Burlington, Inc.
K. Hovnanian at Medford I, Inc.
K. Hovnanian at The Reserve @ Medford, Inc
K. Hovnanian at Kings Grant I, Inc.
K. Hovnanian at Valleybrook II, Inc.
K. Hovnanian Real Estate of Florida, Inc.
Hovnanian Developments of Florida, Inc.
K. Hovnanian Companies of Florida, Inc.
Hovnanian of Palm Beach II, Inc.
Hovnanian of Palm Beach III, Inc.
Hovnanian of Palm Beach IV, Inc.
Hovnanian of Palm Beach V, Inc.
Hovnanian of Palm Beach VI, Inc.
Hovnanian of Palm Beach VII, Inc.
Hovnanian of Palm Beach VIII, Inc.
Hovnanian of Palm Beach IX, Inc.
Hovnanian at Tarpon Lakes I, Inc.
Hovnanian at Tarpon Lakes II, Inc.
Hovnanian at Tarpon Lakes III, Inc.
K. Hovnanian at Pasco I, Inc.
K. Hovnanian at Ft. Myers I, Inc.
K. Hovnanian at Palm Beach XI, Inc.
K. Hovnanian at Jensen Beach, Inc.
Hovnanian of Palm Beach X, Inc.
K. Hovnanian at Martin Downs I, Inc.
K. Hovnanian at Jacksonville I, Inc.
K. Hovnanian at Ft. Myers II, Inc.
K. Hovnanian at Lawrence Grove, Inc.
K. Hovnanian at Jacksonville II, Inc.
K. Hovnanian of Palm Beach XIII, Inc.
Hovnanian of Palm Beach, Inc.
K. Hovnanian at Half Moon Bay, Inc.
K. Hovnanian at Woodridge Estates, Inc.
Pike Utilities, Inc.
Tropical Service Builders, Inc.
K. Hovnanian at Embassy Lakes, Inc.
K. Hovnanian at Delray Beach II, Inc.
K. Hovnanian at Orlando I, Inc.
K. Hovnanian at Orlando II, Inc.
K. Hovnanian at Orlando III, Inc.
K. Hovnanian at Martin Downs II, Inc.
K. Hovnanian at Orlando IV, Inc.
K. Hovnanian Properties of Orlando, Inc.
K. Hovnanian at Delray Beach I, Inc.
K. Hovnanian at Pasco II, Inc.
K. Hovnanian at Port St. Lucie I, Inc.
K. Hovnanian at Delray Beach, Inc.
Eastern National Title Insurance Agency, Inc.
K. Hovnanian Mortgage of Florida, Inc.
South Florida Residential Title Agency, Inc.
Eastern National Title Insurance Agency I, Inc.
Western Financial Services, Inc.
r. e. Scott Mortgage co. of Florida, Inc.
New K. Hovnanian Developments of Florida, Inc.
New K. Hovnanian Companies of Florida, Inc.
K. Hovnanian at Fairway Views, Inc.
K. Hovanian at Lake Charleston, Inc.
K. Hovnanian at Carolina Country Club I, Inc.
K. Hovnanian at Chapel Trail, Inc.
K. Hovnanian at Winston Trails, Inc.
K. Hovnanian at Lakes of Boca Raton, Inc.
K. Hovnanian at Lake Charleston II, Inc.
K. Hovnanian at Lake Charleston III, Inc.
K. Hovnanian at Carolina Country Club II, Inc.
K. Hovnanian at Winston Trails, Inc.
K. Hovnanian at Pembroke Isles, Ins.
K. Hovnanian at Carolina Country Club III, Inc.
K. Hovnanian at Coconut Creek, Inc.
K. Hovnanian at Polo Trace, Inc.
K. Hovnanian Companies of New York, Inc.
K. Hovnanian at Westchester, Inc.
K. Hovnanian at Peekskill, Inc.
K. Hovnanian at Washingtonville, Inc.
K. Hovnanian at Mahopac, Inc.
K. Hovnanian at Carmel, Inc.
K. Hovnanian Developments of New York, Inc.
Cedar Hill Water Corporation
Cedar Hill Sewer Corporation
R.C.K. Community Management Co., Inc.
K. Hovnanian Companies of Massachusetts, Inc.
K. Hovnanian at Merrimack, Inc.
K. Hovnanian at Merrimack II, Inc.
K. Hovnanian at Taunton, Inc.
New England Community Management Co., Inc.
K. Hovnanian Cos. of Metro Washington, Inc.
K. Hovnanian at Ashburn Village, Inc.
K. Hovnanian at Woodmont,, Inc.
K. Hovnanian at Sully Station, Inc.
K. Hovnanian at Bull Run, Inc.
K. Hovnanian at Montclair, Inc.
K. Hovnanian at River Oaks, Inc.
K. Hovnanian at Holly Crest, Inc.
K. Hovnanian at Woodmont, Inc.
K. Hovnanian at Montclair, Inc.(Montclair Condos)
K. Hovnanian at Fair Lakes, Inc.
K. Hovnanian at Ashburn Village, Inc.
K. Hovnanian at Park Ridge, Inc.
K. Hovnanian at Belmont, Inc.
K. Hovnanian at Fair Lakes Glen, Inc.
K. Hovnanian Developments of Metro Washington, Inc.
K. Hovnanian at River Oaks, Inc.
K. Hovnanian at Montclair, Inc. (Montclair Laing)
K. Hovnanian Companies of California, Inc.
K. Hovnanian at Clarkstown, Inc.
K. Hovnanian at West Orange, Inc.
K. Hovnanian at Wayne III, Inc.
K. Hovnanian at Wayne IV, Inc.
K. Hovnanian at Wayne V, Inc.
K. Hovnanian at Hackettstown, Inc.
K. Hovnanian at Spring Mountain, Inc.
K. Hovnaian at East Windsor II, Inc.
K. Hovnanian Treasure Coast, Inc.
K. Hovnanian at La Terraza, Inc.
K. Hovnanian at Highland Vineyards, Inc.
K. Hovnanian Companies of Southern California II, Inc.
K. Hovnanian at Vail Ranch, Inc.
K. Hovnanian at Carmel Del Mar, Inc.
K. Hovnanian at Calabria, Inc.
K. Hovnanian Developments of California, Inc.
K. Hovnanian at Ballantrae, Inc.
Ballantrae Home Sales, Inc.
K. Hovnanian at Hunter Estates, Inc.
K. Hovnanian Developments of Maryland, Inc.
K. Hovnanian Companies of Maryland, Inc.
K. Hovnanian at Seneca Crossing, Inc.
K. Hovnanian at Exeter Hills, Inc.
K. Hovnanian Southeast Florida, Inc.
K. Hovnanian Florida Region, Inc.
K. Hovnanian at East Brunswick VI, Inc.
K. Hovnanian at Berlin, Inc.
K. Hovnanian at Bedminster II, Inc.
K. Hovnanian at Marlboro Township II, Inc.
K. Hovnanian at Inverrary I, Inc.
K. Hovnanian at Mahwah IX, Inc.
K. Hovnanian at Hopewell IV, Inc.
K. Hovnanian at Northlake, Inc.
K. Hovnanian at Castile, Inc.
K. Hovnanian at Tierrasanta, Inc.
K. Hovnnaian at Bridgewater VI, Inc.
K. Hovnanian at Preston, Inc.
K. Hovnanian at Bernards III, Inc.
K. Hovnanian at Wayne VI, Inc.
K. Hovnanian at Rancho Cristianitos, Inc.
K. Hovnanian at La Trovata, Inc.
K. Hovnanian at Watchung Reserve, Inc.
K. Hovnanian at Windsong East Brunswick, Inc.
K. Hovnanian at South Brunswick V, Inc.
K. Hovnanian at Wall Township III, Inc.
K. Hovnanian at Tannery Hill, Inc.
K. Hovnanian at Upper Freehold Township I, Inc.
K. Hovnanian at Jefferson, Inc.
K. Hovnanian at Hershey's Mill, Inc.
K. Hovnanian at Bernards VI, Inc.
K. Hovnanian at Port Imperial North, Inc.
K. Hovnanian at Hopewell V, Inc.
K. Hovnanian at Hopewell VI, Inc.
K. Hovnanian at Manalapan II, Inc.
K. Hovnanian at Union Township, Inc.
K. Hovnanian at Wayne VII, Inc.
K. Hovnanian at Scotch Plains II, Inc.
K. Hovnanian at Thornbury, Inc.
K. Hovnanian at Cameron Chase, Inc.
K. Hovnanian at Marlboro Township IV, Inc.
K. Hovnanian at Port Imperial Urban Renewal, Inc.
K. Hovnanian at East Whiteland, Inc.
K. Hovnanian at Stonegate, Inc.


<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          OCT-31-1997
<PERIOD-END>                               OCT-31-1997
<CASH>                                          10,550
<SECURITIES>                                         0
<RECEIVABLES>                                   35,723
<ALLOWANCES>                                         0
<INVENTORY>                                    410,393
<CURRENT-ASSETS>                               559,301
<PP&E>                                          33,365
<DEPRECIATION>                                  15,338
<TOTAL-ASSETS>                                 637,082
<CURRENT-LIABILITIES>                          237,394
<BONDS>                                        220,926
<COMMON>                                           237
                                0
                                          0
<OTHER-SE>                                     178,525
<TOTAL-LIABILITY-AND-EQUITY>                   637,082
<SALES>                                        754,662
<TOTAL-REVENUES>                               784,136
<CGS>                                          634,317
<TOTAL-COSTS>                                  760,485
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              35,775
<INCOME-PRETAX>                                (12,124)
<INCOME-TAX>                                    (5,124)
<INCOME-CONTINUING>                             (6,970)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    (6,970)
<EPS-PRIMARY>                                    (0.31)
<EPS-DILUTED>                                    (0.31)
        

</TABLE>


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