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Toll Brothers has best spring sales in 5 years, Lennar orders up 33%

New home builders are finally seeing slight signs of recovery, but some builders are seeing improvements in sales, giving the sector hope for more improvement in 2012.

Overall new home sale stats

According to the U.S. Commerce Department, new home building permits jumped 5.1 percent in February and rose 34.7 percent over the year, hitting its highest point since October 2008, while housing starts fell 1.1 percent, suggesting signs of a slow recovery.

Despite increasing permit levels, builders remain cautious in their optimism, with confidence levelsat a five year high this month, yet not surging at a dramatic rate.

Lennar orders up 33%

The new home sector has been one of the hardest hit in real estate, making any signs of recovery more than welcome for builders.

Stuart Miller, Chief Executive Officer of Lennar Corporation said, “New sales orders in the first quarter were encouraging. We have seen the market stabilize, driven by a combination of low home prices and low interest rates, making the decision to purchase a new home more attractive, compared to the heated rental market.”

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Miller added, “We recorded our strongest first quarter sales since 2008, with new orders increasing 33% year-over-year. We have been able to increase sales prices and have started to reduce sales incentives in some of our communities. We have also seen a noticeable improvement in our sales pace per community, which should lead to a significant increase in the operating leverage of our homebuilding segment in the second half of the year.”

Toll has best spring in five years

Another builder seeing signs of improvement is Toll Brothers whose CEO, Douglas Yearley told CNBC that this has been their best spring in five years. This year, the company’s orders are “up significantly and continue to be up significantly. I’m optimistic right now.”

Yearley added, “25 percent of our communities have seen a price increase since Jan 1. That’s encouraging. There are places where we don’t have pricing power (but) we’re not dropping prices. We haven’t dropped prices in over a year.”

“In the last month, Phoenix is back in a big way,” Yearley said, noting that Phoenix has gone from 14 to 16 months of supply to four or five months.

KB Home sales drop

According to CalculatedRiskBlog.com, analyst Tom Lawler said today that “KB Home’s surprise YOY drop in net orders for the quarter ended February 29th was company specific, and may have been related to its ‘preferred mortgage lender’ issue.”

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“Bumping along the bottom”

While luxury and mid-level builders are reporting great improvements in sales, builders like KB are not seeing quite the same levels of improvement across the board.

While Yearley speaks specifically to Toll Brothers’ sales, his comment inadvertently applies to most of the new home sector overall – “We’re bumping along the bottom in certain locations but we’re clearly off the bottom in other locations.”

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.

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