New Home Prices Crack Builder Foundations as Discounts Hit 60-Year Record
TOL sits 27% above its 52-week low of $117.5.
Summary
New U.S. homes are selling at a 10% median discount to existing homes—the widest gap in nearly 60 years—as high mortgage rates crush affordability. The supply of unsold new homes has ballooned to over nine months, a level unseen outside recessions or the pandemic. Builders are slashing prices and offering mortgage buydowns and closing-cost assistance, squeezing margins. Gross margins at the top seven builders are expected to average just 22% in fiscal 2026, down from a 29% peak in 2022. Toll Brothers and PulteGroup, which focus on wealthier buyers, have outperformed peers, but the industry-wide pressure is intensifying. D.R. Horton already cut its full-year revenue forecast on July 21, and U.S. home values fell for the 12th straight month in May. This follows Toll Brothers' strong Q2 contract growth and raised guidance in May, but the macro environment has deteriorated sharply since then. The widening price gap and margin compression signal a tougher second half for even the most resilient builders.
At the time of this announcement, TOL was trading at $149.04 on NYSE in the Real Estate & Construction sector, with a market capitalization of approximately $14B. The 52-week trading range was $117.50 to $168.36. This news item was assessed with negative market sentiment and an importance score of 8 out of 10. Source: Reuters.