This is a partial transcript from "Your World with Neil Cavuto", March 1, 2004, that was edited for clarity.

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NEIL CAVUTO, HOST: After the bell, the home builder Hovnanian Enterprises came in with first-quarter profits that met Wall Street rosy estimates and then some. It also said that things going forward are looking even better, as mortgage rates stay very, very low.

With us now is the Hovnanian in that Hovnanian, the company honcho, Ara Hovnanian.

Ara, good to have you back.

ARA HOVNANIAN, PRESIDENT AND CEO, HOVNANIAN ENTERPRISES (HOV): Good to be back.

CAVUTO: Well, you said a while back when we were fretting about interest rates (search) moving up and Alan Greenspan’s next move being the hike, Neil, calm down, calm down. You are still calm?

HOVNANIAN: We are calm.

Obviously, it is nice that interest rates have remained low, but we are not very concerned, even if they go up.

CAVUTO: All right, now, Alan Greenspan more or less handed your whole industry a little gift by saying, if he had his druthers, he’d be in adjustable rate mortgages or that Americans could have saved a lot money in adjustable rate mortgages. To me, that signaled, Ara, I’m not going to hike rates any time soon.

(LAUGHTER)

HOVNANIAN: I think that is a reasonable interpretation of it.

But, again, I’m not overly worried about where rates go, as long as they are reasonable. And the main reason is...

CAVUTO: What is reasonable? What is reasonable?

HOVNANIAN: Well, at 200 basis points?

CAVUTO: Yes.

HOVNANIAN: You know, 8 percent mortgages, I would say, if that happened rapidly, that might have a psychological effect, if it gets much above that. But we have got a long way for that to happen.

CAVUTO: All right, and what happens typically, when fixed rates get high, is, people move into adjustable rate mortgages. The rates are lower. They are savvy enough.

HOVNANIAN: And, of course, 20 years ago, we didn’t have that phenomenon. When interest rates went up really high, people just disqualified themselves for a mortgage. Today, it is a whole new ball game. And that really helps our industry.

CAVUTO: Did you find it odd that he spoke out on this issue at all, Greenspan talking about maybe adjustable rate mortgages vs. fixed? This just seemed weird to me.

HOVNANIAN: No, he’s very interested in the housing industry. We meet with him, the large builders, typically once or twice a year. He knows, obviously, it is an important driver of the economy, has multiple ripple effects. So it is something he is very focused on.

CAVUTO: Yes.

You know, I always ask you this every time you come. It has been a long, wonderful ride for you. Your stock more than doubled in the last year, that it just can’t keep going. And yet it keeps going.

HOVNANIAN: I really think it can.

I keep referring to our comfort with rates. The reason we are not overall concerned if rates go up, it’s because, it is going to happen when the economy gets better. We have done this through a very bad economy, through a recession, through war, through terrorism.

CAVUTO: What is winning out? Is it the low interest rates or just simple demand for what is an -- an increasingly limited supply of homes?

HOVNANIAN: It’s both. And, of course, that varies from different parts of the country from time to time.

CAVUTO: What is the hottest part of the country for you?

HOVNANIAN: California, both Southern and Northern, is very hot. Washington, D.C. is very hot, and the whole New York suburbs are very, very hot right now.

CAVUTO: All right, but the Greater Northeast area, some say Boston and all that, that has begun to top out a little bit. Do you see that?

HOVNANIAN: To be honest, we are seeing, right up through this week’s sales report -- and we get them every Monday.

CAVUTO: Sure.

HOVNANIAN: It is strong and steady. It’s not wild and going out of control. It’s just really solid, really steady.

We reported last quarter’s new contracts. We were up 50 percent. That was compared to last year’s first quarter. Now, we have done some acquisitions, but not that many acquisitions.

CAVUTO: Sure. So it’s not being buoyed by acquisitions?

HOVNANIAN: No, no.

CAVUTO: Interesting.

HOVNANIAN: And the first few weeks since the first quarter, our sales are just rock -- rock-solid right now.

CAVUTO: All right, we shall see where we all go.

Ara Hovnanian, good seeing you again.

HOVNANIAN: It’s good to be here.

CAVUTO: All right.

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