Toll Brothers is reporting record earnings as demand for new home construction grows, writes Paul Schwedelson for the Philadelphia Business Journal.
The Fort Washington-based homebuilder finished its fiscal second quarter, which ended on April 30, with a net income of $320.2 million. This was an almost 50 percent increase from the same period in 2022. And it was the highest second-quarter total in the company’s history.
The secret to their success? Toll Brothers has been able to capitalize on the current low supply of resale homes in the country.
Many of the current homeowners who took advantage of the historically low mortgage rates during the pandemic are not interested in selling right now. This has led to an increased demand for new construction, specifically homes built on spec.
Toll Brothers defines spec homes as those with no buyer in place at the time construction starts. Typically, the company has only built 20% of its homes on specs, but that percentage increased to 25 percent between February and April.
Toll Brothers CEO Douglas Yearley said that in the future as much as 40 percent of their homes could be built on spec. Families are starting to look to move, but there aren’t many homes on the market.
“They naturally gravitate to new homes where we now have spec available for them and can get them in in the shorter time frame. That’s why I believe May has been so good for us,” he said.
Read more about the Toll Brothers in the Philadelphia Business Journal.
Check out Toll Brothers CEO Doug Yearley on CNBC.