Luxury Homebuilder Outpacing Peers in Recovery

November 15, 2013

The nation’s largest builder of luxury homes is seeing a rapid increase in growth in recent weeks, outpacing other builders who tend to cater to first-time or move-up buyers. 

Toll Brothers Inc. is estimating a 65 percent increase in revenue in the fourth quarter. That would put the homebuilder above the $1 billion threshold for the first time since 2007, Reuters reports. 

Toll Brothers is also reporting a 6 percent increase in new-home orders. Other builders recently have been reporting a drop, such as D.R. Horton Inc. and PulteGroup Inc., both companies which tend to cater mostly to first-time buyers or move-up buyers. Both companies also have reportedly hit a standstill with orders due to rising mortgage rates and the two-week government shutdown in October.  

Toll Brothers, on the other hand, caters to buyers of homes that sell up to $2 million. The builder estimates that its average sales price has increased 21 percent in the fourth quarter to $703,000.

"You have a lot more cash, so the luxury end of the market is not as fickle," says David Williams with Williams Financial Group. 

Luxury new-homes are trending up with 12 percent of houses sold in the nation this year, so far, costing $750,000 or more. A year ago, that percentage stood at 9 percent, according to the National Association of Homebuilders. 

Source: “Luxury builder Toll Brothers outpaces peers in housing recovery,” Reuters (Nov. 14, 2013)

Read More

Land Rush: Builders Hurry to Acquire Lots

Homebuilders Face Shortage of 1 Million Jobs