What kind of housing recovery is it going to be? Toll Brothers' (TOLL) quarterly report and data from CoreLogic on home prices and foreclosures brought some focus back to housing on Tuesday after pending and new home sales data last week showed what some expect will be an uneven recovery taking hold.
The luxury homebuilder reported a 48% rise in fourth quarter revenue and a 75% jump in contracts vs. a year earlier in its quarterly report Tuesday. Net income jumped to $411.4 million from just $15 million a year earlier, due in part to hefty $350.7 million tax benefit.
"Pent-up demand, rising home prices, low interest rates, and improving consumer confidence motivated buyers to return to the housing market in FY 2012," said Toll Brothers CEO Douglas C. Yearley, Jr. in the earnings release. "As household formations accelerated and unsold home inventories dropped to record lows, the industry took further steps toward a sustained housing recovery."
Data released Tuesday by CoreLogic showed home prices decreased 0.2% in October from September as housing entered the real estate "offseason." But a look at home prices against 2011 shows a brighter picture. Home prices rose 6.3% in October on a year over year basis, the biggest increase in more than six years and the eighth straight increase on a year-over-year basis.
Matching the optimism of Toll Brothers' Yearley, Anand Nallathambi, president and CEO of CoreLogic says he's seeing "an ongoing strengthening of the residential housing market," pointing to reduced inventories and improved demand in a report. CoreLogic's pending home price index shows an 0.3% decline in November over October as we enter the winter season, but another healthy 7.1% rise compared to last year.
Meanwhile, foreclosures declined in October, but are still elevated from what we might consider normal levels. There were 58,000 foreclosures completed in October, down from an upwardly revised 77,000 in September and down from 70,000 a year earlier, according to a separate CoreLogic report on Monday. That's still well above the average in the pre-downturn years -- foreclosures averaged 21,000 per month between 2000 and 2006.
There have been approximately 3.9 million completed foreclosures across the country since September 2008, according to the report. And 1.3 million homes, or 3.2% of all homes with a mortgage, were in some stage of the foreclosure process in October. That's down 1.3% from a month prior, and down 9% year to date, "yet another signal that a recovery in housing is gaining traction," writes CoreLogic's Nallathambi.
But the situation is dramatically different in different areas. Five states, for instance, account for 49% of all foreclosures over the last twelve months: California, Florida, Michigan, Texas and Georgia.
Are you seeing any evidence of a housing recovery in your area? Let us know in the comment section below.
More housing data to watch for this week:
Wednesday: MBA Mortgage Index
Thursday: Freddie Mac Mortgage Rates