Luxury home builder Toll Bros. Inc. on Tuesday announced a 41% drop in sales in its fiscal fourth quarter, and its chief executive joined the industry chorus that is calling for quick government action to revive the housing market.
Chief Executive Robert Toll said the preliminary signs of market stability he saw in early September were reversed by the financial crisis. Fears of job losses, a large decline in consumer spending and the plummeting stock market "all contributed to drive our cancellations up" 30%, while demand and home shopper traffic in October fell to "record lows."
The pain is being felt throughout the industry.
On Tuesday, Stuart Miller, president and chief executive of Lennar Corp., said the housing market remained hobbled by rising foreclosures and tightened lending standards, which have left people who would like to buy a home hard-pressed to scrape together down payments.
"At the end of the day, my thesis continues to be that the way we find ourselves on the other side of this is through some form of government intervention," said Miller, speaking at the UBS Building and Building Products Sixth Annual CEO Conference.
The government did take some indirect action Tuesday to help stem the foreclosure crisis.
In Washington, the Federal Housing Finance Agency announced a plan to help troubled homeowners by speeding up the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.
The plan could have tremendous importance because Fannie Mae and Freddie Mac own or guarantee nearly 31 million U.S. mortgages, or nearly 6 of every 10 outstanding. Still, government officials did not have an estimate of how many people would qualify for the new program, which goes into effect Dec. 15.
KB Home CEO Jeffrey Mezger, also speaking at the conference, said the market's eventual recovery would be driven by rising demand for housing as the U.S. population continues to grow.
Toll Bros. plans to release full quarterly results Dec. 4.