Toll Brothers’ Home Orders Soar in Rally for Luxury Sales
(Bloomberg) -- Toll Brothers Inc. reported better-than-expected order growth, a sign that homebuyers rushing to the suburbs during the pandemic are fueling a boom in luxury sales.
- Purchase contracts for the three months through October, jumped 68% from a year earlier to 3,407, the builder said in a statement Monday. The average estimate of analysts surveyed by Bloomberg was 3,237. It wasn’t enough for investors, however -- the shares fell in late trading.
- Orders were the highest for any quarter in the company’s history, both in number and dollar value. “We are currently experiencing the strongest housing market I have seen in my 30 years at Toll Brothers,” Chief Executive Officer Douglas Yearley said in the statement.
- Toll has been able to increase prices at nearly all of its communities, and “demand has remained very strong” in the past six weeks, Yearley said.
- Toll’s customers are taking advantage of the lowest mortgage rates in history to customize their dream houses in the suburbs. In the era of social distancing, many buyers are willing to pay up for custom features, such as rooms for offices and home schooling.
- The company’s buyers are relatively wealthy and less likely to have suffered from pandemic-related job cuts, which hit the service sector hardest.
- While credit is tightening, even for jumbo mortgages used to buy high-end homes, Toll’s buyers are more likely to have cash if they need it. They also have the ability to put down bigger down payments.
- The shares were down 3% to $47.72 at 5:15 p.m. New York time after markets closed. They have climbed 25% this year, roughly in line with an S&P index of U.S. homebuilder stocks.
- Click here to read the earnings statement. The company will hold a conference call Tuesday at 11 a.m. New York time to discuss the results.
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