It seems that rumors of the demise of the homebuilding industry have been greatly exaggerated, at least as they concern high-end builder Hovnanian Enterprises (NYSE:HOV). Shares were blazing today, up 9%, on news of strong earnings and improved guidance from management.

Today the firm reported record earnings -- yeah, we've heard a lot of this kind of thing before -- reaching $1.33, a 25% bump from last year. The figure would have been $1.46, a 36% increase, if not for debt retirement and charges for discontinuing one of the firm's brands. Revenues were up 25% to $1.1 billion, with 22% more homes delivered in the quarter than last year.

If you have friends or relatives in the housing market, numbers like those may not surprise you. After all, in hot areas such as Washington, D.C., buyers are still chasing houses with all the dignity and self-control of love-struck teenagers. And though consumer enthusiasm can mask many sins, it's to Hovnanian's credit that it put up these numbers while it reduced SG&A expenses and held the line on gross margins. And this despite the rather steep increases in homebuilding staples such as lumber.

Though there have been persistent fears about the fallout of rising interest rates, industry stalwarts such as Centex (NYSE:CTX), Pulte Homes (NYSE:PHM), Toll Brothers (NYSE:TOL), Ryland Homes (NYSE:RYL), and M.D.C. Holdings (NYSE:MDC) have profited. And their stocks have beaten the market over the past year, though it has been a pretty nauseating ride.

Hovnanian's management believes the good times will continue. In a separate release, the firm announced a 57% year-over-year increase in the dollar value of net contracts for the month of August, and management pegged this year's guidance at $5.30 per share, looking forward to $6.30 in 2005. That would represent 34% earnings growth for this year and 19% for 2005.

Though the firm's stock has lagged many of it peers so far this year, its margins are near the top of the class, meaning this could be one of the best bargains in the sector if those growth projections come true.

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Seth Jayson is priced out of the D.C. home market. He tries not to bear a grudge, and at publication time, he had no position in any company mentioned. View his Fool profile here .