The Commerce Department might have seen sales of new homes plunge in January to the lowest pace since 1964, but Bob Toll didn't.
"We definitely did not experience that type of a drop in our business," said the Toll Brothers CEO during the company's quarterly conference call with analysts Wednesday.
Rather, the Horsham, Pa.-based builder saw sales take off for its first quarter of 2010, which ended Jan. 31. Net signed contracts were up 129% to $292.1 million and 98% in volume to 526 units. Cancellations were down significantly too, to 6.7% from 37.1% in 2009, same quarter.
"I feel like Punxsutawney Phil," said Toll, who often puts forth market prognostications during the company's calls. "Everyone wants to know if I've seen my shadow. Are we in for six more weeks of winter, or has spring arrived?"
Toll didn't say whether the spring selling season had indeed arrived, only that things seem to be getting better.
"We believe the housing market is still in choppy waters, but the seas are getting calmer," he said.
He added that as the housing market was beginning to recover from the last downturn, there was a January that was expected to be good but wasn't.
"We had choppy waters for a couple of years, but we slowly worked our way up the stairs and became happy and euphoric," he said.
February sales were showing improvements with the advent of the company's annual winter sale, which has been exceeding expectations by 50% to 60%.
"We do see prices going up because we are raising them whenever we get a chance to," Toll said.
The problem of appraisals coming in lower than sales isn't a problem for Toll any more."We are no longer in declining markets," said Donald Salmon, who runs the company's mortgage division. "We have come out bouncing along the bottom, and I think we are seeing [price] support in those markets now."
The mortgage market has stabilized enough to pull Toll back into the market for distressed land. It bought 3,000 lots in its last quarter, enough to help the company bring more communities online during the year.
And it was purchased low enough to produce returns in the mid- to high 20% level priced in today's market, executives said. Half the lots were raw with some entitlements but no horizontal development yet. The rest were fairly finished.
Toll offered some detail on a community the builder picked up in Boca Raton. "They were large lots, beautiful lots, beautiful landscaping, magnificent entrance. But it was a busted builder and a bank that very much wanted to get rid of it," he said. "It was our perfect type of product. It wasn't suited to the other major builders. We made what we think was a good buy."
Toll also numbered its markets in the order they are performing, from best to worst: New York City, high-rise; New Jersey, high-rise; Connecticut; Houston; Florida's Gulf Coast; New York City suburbs; Massachusetts; Austin, Texas; and Virginia and Southern California tying for tenth.