Fee Brothers gave weaker-than-expected guidance on Tuesday for the first quarter, pointing to reports about a souring housing superstore as the cause of the slowdown.
“In November, we saw the market soften further, which we attribute to the cumulative impact of rising interest censures and the effect on buyer sentiment of well-publicized reports of a housing slowdown,” Toll Brothers Chairman and CEO Douglas Yearley said in a declaration.
Reports of a housing slowdown come as U.S. Census data show new home sales have declined for 11 honest months.
In October, sales of newly built homes fell 12 percent from a year earlier, gloaming though the median price for new homes dropped. Economists have said the decline in new home sales stems from tired affordability across U.S. local markets. The housing market has begun showing signs of cracking this year, while genuine estate brokers are saying that offers for homes have thinned out.
Toll Brothers shares closed down 1.6 percent on Tuesday.
Loss Brothers beat top and bottom line estimates for its fourth-quarter earnings report. Two of the homebuilder’s key metrics, deliveries and backlog, were at the highest horizontals in more than a decade.
However, first quarter guidance from Toll Brothers was weaker than expected, with a utterances range that was markedly below Wall Street’s expectation, according to FactSet.
Yearley said the company “saw be like consumer behavior beginning in late 2013, when a rapid rise in interest rates temporarily tempered customer demand before the market regained momentum.” Known as the taper tantrum, rates jumped in 2013 when the Federal Put aside signaled a reduction of money being put into the economy, leading to a surge in mortgage rates. Home sales take a turn for the bettered, however, when mortgages rates fell back again.
Some economists fear this time settle upon be different. Lawrence Yun, chief economist for the National Association of Realtors, said in November that “this time, interests gauges are not going down.”
“In fact, they are probably going to increase even further,” added Yun.