When Hovnanian Enterprises Inc. (HOV) reports fiscal third-quarter results Wednesday afternoon, industry watchers will learn the usual details about contracts, cancellations and revenue. But they also want to hear about drywall.

Builders have been disclosing their exposure to allegedly defective drywall - also known as wallboard - imported from China during the housing boom. A growing number of home owners complain that it generates sulfurous odors and corrosion. These complaints have led to ongoing investigations by several government agencies, including the Environmental Protection Agency, and some of their results are expected next month.

So far, nearly 1,200 complaints have been received from 24 states, stretching from California to New York, and Washington, D.C., according to the U.S. Consumer Product Safety Commission, which is leading the investigation. More than three-quarters come from Florida, with many cases in the Ft. Myers area south of Tampa.

As the housing market peaked in 2005, Hovnanian snapped up the assets of First Home Builders of Florida, a cash deal that gave Hovnanian the top market position in what was then a booming Ft. Myers-Cape Coral region.

"With a number of builders having announced charges and indicating that a majority of their cases occurred in Ft. Myers, it would be surprising if Hovnanian could have completely avoided exposure," said Stephen Kim, associate portfolio manager at Alpine Woods Capital Investors LLC. "This is definitely an issue that I will be watching when they report earnings."

Red Bank, N.J.-based Hovnanian didn't return requests for comment.

For many builders, drywall - gypsum pressed between paper and used in walls and ceilings - is potentially a pricey problem. It's unclear how many homes are affected, but some calculations put it as high as 100,000. Some people in the industry have estimated that it will cost an average of $100,000 per home to replace defective drywall as well as appliances and wiring damaged by corrosion. Families and furniture are moved out of the houses during the work.

Miami-based Lennar Corp. (LEN) has confirmed that about 400 homes it built in Florida, mostly during its 2006 and 2007 fiscal years, have defective drywall. The company has set aside $40 million to repair these homes and has said it believes it will recover $20.7 million from insurance.

WCI Communities, a Florida-based developer set to emerge soon from Chapter 11 bankruptcy proceedings, estimates there are more than 160 potential cases. Its reorganization plan includes the creation of a trust to administer and satisfy homeowners' Chinese drywall claims. WCI will contribute $900,000 to administer the fund. In court filings, WCI estimates that claims could run as high as $97.3 million.

D.R. Horton Inc., (DHI) one of the nation's largest builders, identified 75 homes in Florida and Louisiana that could have the problem. It set aside $6 million for repairs. Smaller rival Ryland Group Inc. (RYL) confirmed between 50 and 60 homes in three Ft. Myers communities, with repair costs estimated at $4.5 million to $6 million, according to its latest quarterly financial filing. Beazer Homes USA Inc. (BZH) has disclosed drywall problems at 30 homes in southwest Florida.

During the housing frenzy, U.S.-made drywall was in short supply. That prompted some builders temporarily to use drywall imported from China, despite the costs of shipping such heavy material across the Pacific. Complaints first emerged in Florida late last year.

In addition to the unpleasant odor, homeowners have said the drywall has caused air conditioners to fail and metals to tarnish. They've also reported ailments ranging from headaches to itchy skin.

"There are so many unanswered questions," said David Jaffe, vice president of legal affairs for the National Association of Home Builders trade group.

While answers are sought, lawsuits are piling up against builders, manufacturers and distributors. While the lawsuits will be expensive, analysts don't expect builders to face crippling charges.

There is, of course, the potential embarrassment.

"Nobody wants to be in a position where they've used inferior materials, even if it's inadvertent," said Merrill Ross, an analyst with BGB Securities Inc. "It doesn't do you any good in your marketing."

-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com