Luxury homebuilder stagnant?
Growth for luxury homebuilder Toll Brothers Inc. took a hit with a reported rise of cancellations from 6.2 percent in the first quarter to 7.4 percent in the second quarter and although contracts signed rose two percent in units and dollars, the company warns of uncertainty in the luxury market. Toll Brothers reports that continued volatility in the stock market and overall economic uncertainty have plagued homebuyer confidence.
Toll’s revenue in the fiscal third quarter ending in July, fell 13.2 percent while deliveries in the same period fell 14 percent.
The disappointing quarter for the builder that focuses on buyers typically less affected by economic downturn points to a general feeling of uneasiness of affluent homebuyers and a hesitancy to buy.
Skittish consumers in the luxury market
“Nothing shows you the consumer is getting skittish more than tepid orders and higher cancellations,” Demir Gjokaj, senior homebuilder and real estate analyst with ITG Investment Research told Reuters. Gjokaj had projected an 18 percent jump in orders, Wall Street analysts averaged projections of a 12 point increase, making two points a paltry rise in orders that connotes a “broader malaise.”
“The luxury consumer is pulling back,” Gjokaj continued, which implies luxury builders could have to cut prices if demand remains stagnant.
