Toll Brothers, Inc. is the largest company in the US luxury homebuilder industry. They have recently reported their highest revenue seen since the 2008 recession. This has helped to send the company’s shares to an increasing five-year high. Many real estate experts see this as yet another sign of the US housing market recovery.
Demand for New Homes Increasing
Toll Brothers is a home building firm that targets customers who are affluent. The typical annual earnings of their target market customers is over $100,000 per year. They also have immaculate credit records, with the highest FICO imaginable. The homebuilder firm reported sharp order increases. They have also forecast that their revenues will continue to increase for at least another full year.
Douglas Yearley, CEO of Toll Brothers, issued a statement saying that they are proudly enjoying the most uninterrupted demand for new homes to be built that they’ve seen in more than five years. He believes that the housing recovery drive is coming from a demand for more homes on the market, extremely low interest rates and more affordable home prices.
New Home Demand Helping Market to Heal
The deep rut of the housing market in the US caused a big bubble burst six years ago. This prompted a recession in America’s economy. For the past year, the market has been trying to recover, although quite slowly. In that time, home sales have began to increase. The increase in sales is due largely to the low home inventory and the continuously increasing high rental rates in the country.
In July 2012, home resales in the US continued to rise as modest labor market improvements and very low mortgage interest rates helped to make conditions in home buying more affordable, NAR announced on Wednesday.
Many homebuilders have been reporting very strong results due to an increasing demand for new houses. Toll Brothers, PulteGroup, D.R. Horton and Lennar Homebuilders are just some of the US home building companies that have seen high increases in new home orders.
US Housing Market in Repair
Robert Toll, Executive Chairman of Toll, says that the housing market is in repair. Toll has said that they are gaining a great share in the market as small and medium sized private homebuilders, their primary competition, remain strained for capital. Currently, they are the only luxury homebuilder that’s publicly traded. CEO Yearley says that their contract growth speed has gone far beyond that of the nationwide housing data. They are continuing to gain market share, he says.
The signed net contracts of the firm increased to 1,119 units between May and July. This was a rise of 57 percent. Their backlog jumped to about $1.62 billion, and increase of 59 percent. According to Yearley, the backlog increases happened during the 2011 fourth quarter’s first three weeks.
US Housing Market Shares
They currently forecast 2012 revenues of home sales between $1.71 billion to $1.84 billion. They forecast a rise in their full-year 2012 home delivery by about 200 units. They increased the original projected delivery from 3,000 units to 3,200 units. This forecast will require no less than a 16 percent revenue increase, and at least a 15 percent delivery growth. Shares in Toll Brothers have also increased by 25 percent in the past three months.
On Wednesday alone, share rose by percent, and could be purchased on the New York Stock Exchange at $33.68 per share. This helped to push the shares of other US homebuilders up, which is also increasing revenue in other industries, such as homebuilder products and supplies. Here are a few 2012 stats to back up these claims:
- PulteGroup has seen an increase of 98 percent.
- Lennar has seen a rise of 59 percent.
- D.R. Horton numbers have risen by 43 percent.
- Fortune Brands has seen sales increases of 5 percent.
