Stocks continued to creep higher as the Dow gained 43 points to 20,937 on heavier volume.
Housing continues to shoulder on. Toll Brothers, the Pennsylvania based builder of deluxe single family homes reported upbeat numbers as revenue was up 22% and net income was higher by 43%. The company delivered 26% more homes but margins dropped 140 basis points to 24.3%. The company raised its low end delivery guidance from 6,700 homes to 6,950 homes and reaffirmed gross margin guidance at 24.8% to 25.3%. CEO Doug “Annual” Yearly said this was the best spring selling season he has seen in 10 years.
The Commerce Department said that new homes sales declined 11.4% in the latest reading which is the biggest monthly drop in two years. The gurus had predicted a slight drop of 1.5% so this number was worse than expected by a wide margin however the prior month sales figure was adjusted higher as sales hit a 9 year high. Economists are not worried by the drop since month to month sales figures can be volatile. They also cite strength in the labor market and wage inflation as reasons housing should continue to rise. They are however worried about not enough starter homes being built since builders say its hard to make money on houses in the sub $300k price level.
Here in Seattle the market remains strong but there are more homes for sale as people with long held rentals are starting to take profits. Some houses are also on the market as middle income families are under pressure thanks to the high property taxes in King County. They are moving north, south and east to find relief.