Dive Brief:
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If the performance of big builders Toll Brothers and K. Hovnanian are any indication, the strength of new home sales going into 2015 could be in doubt.
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Although both builders showed gains in sales contracts during their fourth quarters, which ended Oct. 31, they fell short of Wall Street’s expectations and their profit margins were less than the builders had projected.
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Hovnanian officials called 2014 a “disappointing” year, both for the builder and for the homebuilding industry as a whole, pointing to a slim, 1% increase in U.S. home sales this year compared with last.
Dive Insight:
Although economists across the housing industry have offered optimism for the year ahead, financial analysts reacted to these two builders’ performance with less confidence for the housing recovery.
“I don’t see any evidence of it gaining steam,” said Vicki Bryan, a homebuilding analyst for Gimme Credit LLC. She called the industry’s 2014 performance “sobering” and predicted it will “continue to be soft” next year.