Toll Brothers (TOL) led homebuilder ETFs higher Wednesday after the bellwether reported better-than-expected quarterly results and said demand is improving in the housing market.
Shares of the luxury builder were up nearly 5%. In housing ETFs, iShares Dow Jones US Home Construction (ITB) rose 2.5% and SPDR S&P Homebuilders (XHB) added 1.7%.
Builder ETFs have been stellar performers in 2012 on hopes the housing market is finding its footing after the subprime debacle. The sector funds are trading at the highest levels since 2008. [Housing ETFs Build Gains; Confidence Hits Five-Year High]
“We are enjoying the most sustained demand we’ve experienced in over five years,” said Douglas Yearley, chief executive of Toll Brothers.
“We believe the housing recovery is being driven by pent-up demand, very low interest rates and attractively priced homes,” the CEO said. “Customers who have postponed buying for a number of years are moving into the market. With an industry-wide shortage of inventory in many markets, we are enjoying some pricing power.”
Existing home sales rose 2.3% in July, a realtors group said Wednesday. In the afternoon, investors will get the minutes from the latest Federal Reserve meeting.
The report on July new home sales crosses Thursday.
Toll Brothers beat Wall Street estimates on quarterly profit and revenue, said Williams Financial Group analysts in a note.
“Overall, we are encouraged by the Toll’s ability to drive broad-based improvements across all operating metrics. We remain somewhat cautious with respect to the luxury end of the market as we believe the pent-up demand of this demographic is likely less substantial than that of the first time buyer, and will slow as the recovery further develops,” the analysts said.
iShares Dow Jones US Home Construction
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