Toll Brothers CEO Bob Toll offered some candid observations on the housing industry this morning, urging more government action to inject some confidence in the market.
"I think the big issue now is confidence," said Toll, in speaking to financial analysts at the Citi Investment Research 21st Annual Global Industrial Manufacturing Conference in New York.
"There are not a lot of homes being started," he said. "And there are not a lot of homes being sold," he added.
Toll said he began getting concerned last summer when the annualized rate of new-home sales hit about 800,000. "It felt more like 400,000," he said.
When he saw the 588,000 annualized new-home sales number for January, Toll said he called the Census Bureau and asked if they calculate cancellations into the numbers.
"The answer I got was that they don't have cancellations in the numbers, which means with cancellations running at about 35 percent, we're talking about roughly 600,000 less 35 percent," Toll explained.
Toll expressed concern that federal officials may be overconfident that the level of foreclosures is manageable. He said officials have told him privately that of the $1.5 trillion in mortgages that have gone bad, only $300 billion will ultimately foreclosure.
"They tell me that $300 billion is a manageable number, but my opinion is that if we don't have some serious intervention on the part of the Treasury, Federal Reserve, and Congress, the risk could be greater than we recognize," Toll concluded.