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.
Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Joe Loomer
August 27, 2011 at 7:34 am
"…buyers typically less affected by economic downturn…" Huh?!?!?! What the heck does that mean? Only the little man (and woman) were affected by the economic downturn? Don't you think the affluent would take advantage of THIS market more than any other sector of the public?
In my area, you have a less-than 3% chance of selling your home if it's over $300K – about one quarter of what it was four years ago. This with two nuclear power plants, seven major hospitals, a large military installation, and the headquarters of the two largest golf-cart manufacturers in the world. You can't tell me these buyers are "less affected."
Navy Chief, Navy Pride
Bruce Lemieux
August 27, 2011 at 8:37 am
After three years of declining sales activity of upper bracket homes in my market outside of D.C., activity has been up significantly beginning late last year. I attribute it to better values, higher confidence and buyers with a ton of cash.
Ruthmarie Hicks
August 27, 2011 at 11:58 pm
The luxury market in Westchester has remained strong – however I have seen people pulling out of new construction.
Sam in Austin
August 29, 2011 at 1:00 pm
Toll Brothers is a luxury builder? I think not. They are just a little higher end production builder.