Toll 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 levels in more than a decade.
However, first quarter guidance from Toll Brothers was weaker than expected, with a deliveries range that was markedly below Wall Street’s expectation, according to FactSet.
Yearley said the company “saw similar consumer behavior beginning in late 2013, when a rapid rise in interest rates temporarily tempered buyer demand before the market regained momentum.” Known as the taper tantrum, rates jumped in 2013 when the Federal Reserve signaled a reduction of money being put into the economy, leading to a surge in mortgage rates. Home sales recovered, however, when mortgages rates fell back again.
Some economists fear this time will be different. Lawrence Yun, chief economist for the National Association of Realtors, said in November that “this time, interests rates are not going down.”
“In fact, they are probably going to increase even further,” added Yun.