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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (74974)	3/15/2007 5:54:07 PM
From: Qualified Opinion	Read Replies (1) \| Respond to of 94695

Toll Calls Spring `A Bust,' Can't Predict Recovery (Update4) By Brian Louis March 15 (Bloomberg) -- Toll Brothers Inc. Chief Executive Officer Robert Toll said the spring selling season has been ``pretty much a bust'' and he can't predict when the housing recovery will begin. ``When will the market rebound?'' Toll said at a conference in Las Vegas today. ``Who knows? The Shadow knows. I have no idea. I would've thought that it would've rebounded by now and I would've been dead wrong, and I was.'' Profit at homebuilders has plunged since the five-year housing boom ended a year ago. Rising inventories of unsold homes and hesitation by potential buyers on concern that the price of their house will drop has stifled sales. Even as the market struggles, Toll said he has seen strong demand and raised prices in several markets, including parts of the San Francisco area, cities surrounding New York and the Los Angeles area. The Horsham, Pennsylvania-based company is the biggest U.S. luxury homebuilder. ``You saw no jump in all the other markets and the spring selling season, or the prime selling season, was pretty much a bust on a per community basis,'' Toll said. Toll defined the ``prime selling season'' for new home builders as beginning after the winter holidays, starting with the weekend after the National Football League's Super Bowl championship and President's Day weekend. The market continues fairly strong and fades after Passover and Easter. It doesn't pick up again until July, he said. Cancellation Rates More than half of all U.S. home sales are made during a period that begins in February, so homes can be completed in time for school to start in September. Toll said one of the reasons business is slow is because additional homes keep hitting the market as customers continue to cancel, Toll said. ``I think the cancellations are abating now,'' he said. A bright spot has been the company's urban developments in cities including Hoboken, New Jersey, Toll said. ``We're killing 'em in Hoboken,'' Toll said. Toll Brothers is selling luxury waterfront condominiums there for $400,000 to more than $1 million. Pulte's Outlook After predicting that the home market was nearing a ``bottom'' in December, Robert Toll last month reversed course as deposits failed to live up to expectations and he has tempered his comments since then, including in today's presentation. Toll is the second homebuilding executive today to cast doubt on a housing rebound this year. Home construction executives have turned bearish on the prospects for a recovery after earlier forecasting buyers would return in 2007. Earlier today, Pulte Homes Inc. Chief Financial Officer Roger Cregg said housing is unlikely to have a quick revival as buyers wait out the drop in prices. ``We're not projecting anything to bounce off the bottom at this point,'' Cregg said at a UBS conference in London. ``There's been a lot of buyers that have moved to the sidelines.'' Pulte, based in Bloomfield Hills, Michigan, is the fourth- largest U.S. homebuilder by revenue. Shares of Pulte rose 11 cents to $26.63 at 4 p.m. in New York Stock Exchange composite trading. The stock is down 20 percent this year. Future `Not Bright' On March 7, D.R. Horton Inc. Chief Executive Officer Donald Tomnitz also issued a dour outlook for 2007. ``I don't want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year,'' Tomnitz said at a Citigroup Inc. conference in New York. ``Our future is not as bright as what we would like it to be.'' The recent executive forecasts, along with a crisis in the subprime lending market, have sparked a decline in homebuilder shares this year. The stocks had gained from July to February on expectations of a housing recovery this year and comments from some industry executives that the market was stabilizing. A Standard & Poor's measure of home construction companies tumbled 15 percent from Jan. 1 through today, erasing much of the gains achieved after rebounding from a July low. Eight of the 16 stocks in the index have lost at least 15 percent of their value this year. The worst performer is Scottsdale, Arizona-based Meritage Homes Corp., which has fallen 31 percent this year. Shares of Toll Brothers rose 49 cents, or 1.7 percent, to $28.82. To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net . Last Updated: March 15, 2007 16:14 EDT Link: bloomberg.com