Mortgage rates will have to fall a lot further for homeowners to be broadly willing to exchange their 3% mortgage rate for the current rate .... also the sense I've gotten is that the high rates have merely been less of a headwind for homebuilders, not a tailwind .... I continue to be overweight the sector.
Here's commentary from the TOL PR -
“As we approach the start of the spring selling season in January, we are encouraged by the recent 75 basis point drop in mortgage rates. 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. Our strategy of broadening our home offerings to include lower price points, coupled with our focus on increasing our supply of spec homes and growing our community count, has positioned us well for this market. At the end of fiscal 2023, we were operating from 370 communities, up from 348 at year-end 2022. We plan to further increase community count by approximately 10% in fiscal 2024.
“Over the long-term, the outlook for the new home market remains bright, supported by favorable demographics, the supply-demand imbalance that has resulted from over a decade of underproduction, and the aging of the country’s existing housing stock. With our industry-leading luxury brand, Toll Brothers is well positioned to capitalize on these trends. Our strong balance sheet, low leverage, and ample liquidity, including significant projected cash flows from operations in fiscal 2024, should allow us to continue investing in our business while returning cash to shareholders well into the future.”
MHO, CCS, BZH
