Toll Brothers Deposits Rise 10% as Mortgage Rates Increase, Chairman Says
Toll Brothers Inc., the largest U.S. luxury-home builder, saw deposits increase 10 percent compared with a year earlier in the past two weeks as mortgage rates began to rise, Chairman Robert Toll said.
“In the last two weeks, interest rates have been going up,” Toll said today during the company’s earnings call. “So finally there is no longer a reason to sit and wait.”
U.S. mortgage rates climbed for the third straight week to a three-month high, Freddie Mac reported today. The average rate for a 30-year fixed loan rose to 4.46 percent in the week ending today from 4.40 percent, the McLean, Virginia-based mortgage finance company said. The rate had fallen to 4.17 percent in the week ended Nov. 11, the lowest in records dating to 1971.
Toll’s comments followed a surprise increase in an index of pending home sales in October. The number of Americans signing contracts to buy previously owned homes jumped by a record 10 percent, the National Association of Realtors said. The Standard & Poor’s Supercomposite Homebuilding Index gained 3.9 percent at 4:15 p.m. in New York Stock Exchange composite trading.
Toll shares increased 41 cents, or 2.2 percent, to $18.87. The company reported its second straight quarterly profit today as a tax benefit helped boost results amid slumping sales.
Toll Brothers’ net income for the three months through October was $50.5 million, or 30 cents a share, compared with a loss of $111.4 million, or 68 cents, a year earlier, the Horsham, Pennsylvania-based company said in a statement today. The tax benefit totaled $59.9 million.
Toll Brothers expects to sell between 2,100 and 2,900 homes in fiscal 2011 at an average price of $540,000 to $565,000. The company sold 2,642 units in the recently ended year, down 11 percent from fiscal 2009.
For the year, Toll Brothers reported a net loss of $3.37 million, or 2 cents a share, compared with a loss of $756 million, or $4.68, in fiscal 2009.
“Our 2010 is not a bad indicator of how we expect 2011 to turn out,” Chief Financial Officer Martin Connor said during the conference call.
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