The housing market feels really good, Toll Brothers CEO Douglas Yearley told “Nightly Business Report,” rating it a “solid eight” on a scale of one to ten.
“Buyers are coming back out after being on the sidelines for six years to take advantage of these interest rates and business is very good,” he said, pointing out that the recovery is in the early stages.
The luxury home builder posted stronger profits on Wednesday, 40 percent higher than a year ago. It cleared nearly $25 million on sales of $516 million, up 38 percent from last year.
Toll Brothers, whose houses sell for about $600,000, was able to raise prices in about 60 percent of its communities from February through April, Yearley said. The average hike was $26,000 per home.
“As we raise prices, it seems like there’s more demand as people feel the urgency to get in before prices go higher,” he added.
Yearely noted the hottest market for the homebuilder is the New York urban area—Manhattan, Brooklyn and Hoboken, N.J., which is “absolutely on fire.”
Northern California and the coastal area of southern California are also doing well. The Midwest, however, is a bit soft, he said, although the company has seen strength in Michigan.
Yearly is unconcerned about what rising interest rates may bring for the future of the housing recovery.
“If the rates go up slowly, which they may, we’re fine,” he said. “It’s going to create more urgency as people want to get in.”
If rates “skyrocket” up a couple of points, that’s a different story, he added, but “I don’t think anybody thinks that’s going to happen.”