Big Builder Sees Slower Home Sales
Mike Mergen/Bloomberg News
A Toll Brothers site in Holland, Pa. The company said home prices will rise slower than in the recent past.
By VIKAS BAJAJ and DAVID LEONHARDT
Published: November 9, 2005
The nation's largest maker of luxury homes, Toll Brothers, said yesterday that soaring home prices appeared to have ended. It was the latest sign that many real estate markets are slowing.
Although the company said it expected to report a record profit for the last 12 months, it predicted that it would sell fewer homes over the next year than it had forecast and would make less money than previously anticipated. High gas prices and the recent hurricanes seem to have rattled consumers, causing some to delay purchases of houses, company executives said. Also, some local governments appear to be holding back on construction permits, to slow new building.
Shares of Toll Brothers fell after yesterday's announcement and ended the day down 14 percent, at $33.91. The news dragged the shares of other home builders lower, and the Bloomberg United States home builders index fell 7 percent yesterday.
"The price increases pre-Katrina were at warp speed, and since Katrina, instead of going up $5,000 or $10,000 every week or two, we have been limited to no price increases or very limited price increases," Robert I. Toll, the company's chief executive, said in a conference call yesterday. The number of investors buying condominiums and houses in the hope of turning a quick profit also seems to have plunged, he said in an interview last week....Certain markets appear to be losing steam faster than others, Mr. Toll said. Washington, Chicago and Northern California were slowing from high levels of activity, while Boston, Denver and the west coast of Florida were still hot markets for the company. Las Vegas, which has experienced a huge condo building boom, slowed down "ever so slightly" in July and appears to be staying at that level, he added.
The company, whose homes sell at an average price of $679,000 and whose typical buyer has an annual family income of more than $100,000, emphasized that it still expected a happy ending for the long housing boom....
http://www.nytimes.com/2005/11/09/business/09housing.html