Dive Brief:
- Homebuilding giant Toll Brothers reported that revenue in the second quarter rose 24% to $1.27 billion, with a profit of $105.5 million, according to Reuters.
- Company officials said customers have seen substantial home equity growth since the recession, and, in an environment of economic growth and strong employment, they are choosing to sell their existing homes and buy new.
- In a sign that the overall housing industry is in a continuing recovery, homebuilders D.R. Horton (10%) and PulteGroup (41%) also reported second-quarter revenue increases.
Dive Insight:
According to a Tuesday Commerce Department report, new single-family home sales increased 12.4% from June to July, the strongest pace since October 2007. Year over year, sales grew 31.3%, and sales far outperformed economist predictions. Last week, another Commerce Department report indicated that July housing starts were up 2.1% month over month and 5.6% year over year. The agency reported a very slight dip in building permits from June to July, but also found that both multifamily (8.3%) and single-family (0.5%) construction increased.
Unsurprisingly, in the wake of the uptick in housing starts and sales, the latest National Association of Home Builders/Wells Fargo Housing Market Index indicated that builder confidence rose two points from 58 to 60. NAHB Chairman Ed Brady attributed the rise to increases in both construction and home sales. Industry experts also pointed to job growth and low mortgage rates as drivers for a stronger housing market.
Toll Brothers — the nation's 10th largest homebuilder according to the Builder 100 — builds with the higher-end customer in mind, with average selling prices around $850,000. In February, Fortune named Toll Brothers one of the most admired companies in the U.S. (No. 628 overall and the No. 1 homebuilder), scoring the company high in the categories of innovation, quality of management, financial soundness, quality of products/services and social responsibility. Last year, Fred Cooper, senior vice president of finance, international development and investor relations for Toll Brothers, told Construction Dive that the company's focus on the luxury market niche has been a primary driver in its success.