After calling the last five months "among the most difficult in U.S. history" for new-home builders, Toll Brothers CEO Bob Toll still managed to find a flicker of hope in January's traffic up tick.
But almost any positive note might sound good compared with the company's fall in revenue, backlog, and net new contracts in its first quarter, which ended Jan. 31. They were down in value by 41%, 56%, and 66%, respectively.
The company's 3.99% 30-year fixed-rate mortgage financing program "complemented the typical post-holiday season bounce," Toll said during a conference call Wednesday afternoon discussing the results with analysts. About 70 buyers were influenced by that program, which cost the builder roughly $20,000 to $25,000 per home.
And a private sales event promoted by telephone calls to qualified buyers who had previously visited the company's communities was even more successful, Toll added.
"You call them on the phone, and you tell them you have something very special that is good for this weekend only, but you have to come to the community and so on and so on," he said. "We actually felt pretty good about it. ... Some of the communities took deposits that haven't seen traffic in a couple of years."
Traffic through the week of Feb. 8 was up 34%, Toll said, "Reinforcing our belief that there are some buyers out there who are tired of postponing [a home purchase]."
Toll spent a bit of time on the political soapbox, encouraging Congress to approve the proposed $15,000 tax credit for home buyers.
"The Senate and House Conference Committee is in recess now," he said. "Maybe somebody can pass it on [to support the $15,000 tax credit] to one or two or three."
Toll said he favored that over interest rate buy downs or offering builders a five-year window to carry back losses against past profits.
"The $15,000 I have no doubt would make the greatest difference," Toll said, noting his belief that it will help absorb the excessive number of homes on the market.
While he said there is no doubt that the market is overbuilt, Toll maintained that there were three years' worth of pent-up demand in the market, waiting for prices to stabilize.
"We believe that getting buyers back in the market will help put Americans back to work quickly," he said.