Toll Brothers TOL reports earnings after the bell today in the midst of a housing slump around the world. Zacks expects Toll Brothers to post EPS of $2.86 & revenue of $2.47 billion. The stock is up around 50% YTD, but down over 6% this month.
Redfin CEO Glenn Kelman said last week that sales volume “couldn’t be worse,” and the “only people moving right now are the ones who absolutely have to.” Higher house prices (Redfin reports that the median home price is about 44% higher than pre-pandemic) and rising interest rates are squeezing consumers out of the market. We’ll see the July Existing Home Sales report today at 10AM ET, with an Econoday consensus of a 4.16 million annual rate.
The share of homes on the market worth more than $1M+ is also near a record high per Redfin’s data. Despite that, the Wall Street Journal reports that banks are “tapping the brakes” on jumbo mortgages due to the recent bank failures (First Republic Bank’s business was mainly with wealthy homebuyers), and of course, rising rates. JPMorgan Chase, which acquired First Republic, has said they won’t be “putting a lot of cheap jumbo mortgage loans on our books.” That could compound the bad news for Toll Brothers, whose average price per unit in 2Q was $999,200, and forecast prices to top $1M in 3Q.
Is bad news built in, with undiscovered upside? Or will Toll Brothers post an unexpectedly lower forecast? Tune into Schwab Network for earnings discussion and more!
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