(Bloomberg) -- Toll Brothers Inc. stock rose as the homebuilder’s executives pointed to “solid” demand in recent weeks as mortgage rates pulled back from two-decade highs.
“It sure feels good heading into the spring season,” Chief Executive Officer Douglas Yearley said in an earnings call Wednesday. “We think we will be able to raise prices. And we’ll be able to continue to manage and hopefully continue to modestly reduce the incentive.”
Toll shares were up 3.9% to $90.63 at 10:01 a.m. in New York Wednesday. The company said Tuesday that it expects to deliver 9,850 to 10,350 homes in fiscal year 2024, up from the 9,597 units the company delivered in fiscal year 2023.
Buyers have been confronting a housing market that’s become increasingly unaffordable since early 2022 as mortgage rates rose. But borrowing costs have fallen for the past five weeks, bringing the average for a 30-year, fixed loan closer to 7%.
That bodes well for builders, many of which have been offering incentives such as rate buydowns or lower prices to lure buyers. The companies have been helped in part by the lack of homes on the market as many owners are reluctant to list their properties, keeping supply tight.
“With resale inventories at historic lows, buyers continue to be drawn to new homes, and we expect lower rates with lower inflation to add to this already solid demand,” Yearley said Tuesday in a statement on earnings for the three months through October.
The company said it expects an adjusted home sales gross margin of 27.9%, below the 28.7% in 2023.
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