This is a partial transcript from Your World with Neil Cavuto, December 9, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Through the roof! Hovnanian, profits more than double in the latest quarter thanks to a very hot housing market. The homebuilder also lifting its earnings outlook for next year. If you got into this one a year ago, the stock I'm talking about, you'd be up 120 percent on your investment. So can the good times last? Let's ask the guy who knows, Ara Hovnanian, the CEO of Hovnanian Enterprises.

Ara, good to see you.

ARA HOVNANIAN, CEO, HOVNANIAN ENTERPRISES (HOV): Good to see you as well.

CAVUTO: Still on all cylinders?

HOVNANIAN: Absolutely. Business is just as solid as could be.

CAVUTO: Where was it really solid?

HOVNANIAN: Well, the strongest markets are in Southern California, Northern California, the entire D.C. market and the whole Northeast market.

CAVUTO: Those are the markets, all the naysayers were saying, were getting too rich and getting a little too bubbly.

HOVNANIAN: Well, you have to keep in mind, demand has been steady and supply is about half of what it was during the peak of the `80s. We are producing literally half of the housing each year than we did just 10 years ago.

CAVUTO: But now you are hearing anecdotal evidence in hot markets like the Northeast, for example, in New York City, and all, some expensive properties sit a while longer. They don't go for their once obscene asking prices. What is happening?

HOVNANIAN: Well, I can't comment a lot on the real luxury products the million, $2 million, we have very, very little in that price range.  What we do have actually has done quite well, but the bulk of our business in the middle price ranges, $150,000 to $400,000. That's very solid.

CAVUTO: But you were dipping the toe into the expensive market, and a greater share of your business and profits were coming from that, do you worry.

HOVNANIAN: Well, no, not very much at all. We cover a lot of price points, so whether the low end is hot, medium end, high end, we've really got a lot.

CAVUTO: Do you adjust it, then, Ara? let's say the high-end looks a little iffy, do you say, all right, let's do more low-end stuff?

HOVNANIAN: Absolutely. Actually, in Dallas, we made a quick switch.  The higher end was a little slower, and the middle end was a little slower.  We took some communities that we were going to do middle end product and redesigned it for low end product. And it's been a great success for us.

CAVUTO: If you don't mind my switching gears here, we've got a new Treasury secretary coming in. He's from CSX, it's a railroad concern. Now you are big housing guy, is that the kind of guy you want to see running the Treasury?

HOVNANIAN: Oh boy, I wanted to stay away from politics. I will say instead that we're very comfortable with whoever is in that slot. Probably who heads the Fed is more important. And I think the Fed has been doing a phenomenal job that has really helped our industry.

CAVUTO: So interest rates where they are is where you expect they will remain?

HOVNANIAN: Yes. I don't think anybody sees big upticks coming up soon. And if the rates do go up, it's really only going to happen if the economy gets stronger. And we love a strong economy. We take that with higher rates any day.

CAVUTO: Ara Hovnanian, good seeing you again.

HOVNANIAN: OK. Thank you.

CAVUTO: Have a very good holiday, my friend, Ara Hovnanian.

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