Real Estate

Toll Brothers’ beats revenue expectations

Here are the two factors impacting the luxury housing market

The latest earning results from luxury homebuilder Toll Brothers provide better insight on what's affecting the housing market, especially the luxury housing market, according to an article by Bob Bryan for Business Insider. 

True to their optimism after the third quarter of 2015, Toll Brothers met analyst expectations at $0.40 per share and beat revenue expectations by $18.6 million. Total revenue was $928.6 million, the article stated. 

Here are the two major factors that affected their earnings:

1. The labor market. 

"We are experiencing modest lengthening of our production timelines associated with increasing complexity in our homes and a tighter labor market," said CFO Martin Connor.

Connor is saying that because there is less and less slack in the labor market, it is hard for builders to find enough workers to deliver the homes quickly. 

2. Costs of homes 

The homes they are building are more expensive, getting at the affordability issue we noted late last year would become an increasing problem for the housing market. In its release, Toll Brothers said it would increase the low-end of its average price range for houses it built by $10,000. It now says its average delivered price will be between $810,000 and $850,000.  

In addition, CEO Douglas Yearly repeated views from the third quarter of 2015, saying that the company remains optimistic.

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