The worst is over for the U.S. housing market, and a rebound will gain momentum in 2012, according to Douglas Yearley, the chief executive officer of Toll Brothers Inc.
"The recovery is here to stay," Yearley, whose company is the largest U.S. luxury-home builder, said in an interview Tuesday.
"I think 2011 will be an improving year," he said, "but I think 2012 will be a big year for us."
The real estate industry, which triggered the worst recession since the 1930s, is struggling to sustain a recovery as foreclosures mount and the nation's unemployment rate sticks near 10%.
The housing market will avoid a double-dip slump after reaching bottom last year, said the 50-year-old Yearley.
Pending sales of U.S. homes unexpectedly rose 10% in October from a month earlier, the National Association of Realtors reported on Dec. 2.
Toll Brothers in Horsham, Pa., is seeing more "quality" visitors to its sales offices, a sign that prospects are less skittish about the market and more serious about making purchases, Yearley said.
"The number of visitors isn't up," he said. "But the quality of that visitor — the questions they're asking, their level of interest in a new home — is."
Toll Brothers last week reported its second straight quarterly profit after three years of losses as it recorded benefits from a tax-law change and lesser writedowns on development land.
For the fiscal year ended Oct. 31, the company lost $3.37 million on revenue of $1.49 billion, down 76% from 2006 peak sales of $6.12 billion.
Almost six in 10 U.S. adults say a housing recovery is at least two years away, according to a survey released Tuesday by Trulia Inc. and RealtyTrac Inc.
More than one-third of respondents said the rebound will not happen until 2014 or later.
Home prices, as measured by the S&P Case-Shiller Index of values in 20 cities, have fallen 29% from their 2006 peak.
Unemployment is the biggest barrier to rebounding sales, according to Yearley. The U.S. jobless rate climbed to a seven-month high of 9.8% last month, the Labor Department reported on Dec. 3.
President Obama has also slowed the economic recovery by being too critical of business, Yearley said.
"The guy needs to cheerlead," he said.
"He needs to get the country feeling good about the country and get the country to work," Yearly said. "There's this malaise that hangs over it."
The Obama administration's homebuyer tax credit pulled sales forward rather than creating demand, Yearley said.
Home sales were boosted by the tax benefit this year before sliding after the April 30 deadline for contract signings.
Purchases of new homes dropped 8.1% in October to a 283,000 annual rate, the Commerce Department reported in November.
Sales set a low at a 275,000 pace in August, the record since data collection began in 1963.
A more effective incentive would have been to offer tax credits to people who buy new homes, which create more jobs than resales, according to Yearley.
Such a plan is unlikely to come to fruition, he said.
Toll's best markets are in New York, Washington, D.C., and parts of North Carolina, Yearley said; the Las Vegas and Chicago areas are among the worst.
"Chicago to us is as bad as Las Vegas," he said. "We sell more houses in Michigan than Illinois."
The company expects to sell 2,100 to 2,900 homes in fiscal 2011 at an average price in a range of $540,000 to $565,000.
The home builder sold 2,642 units in the recently ended fiscal year, down 11% from 2009.
Toll Brothers is poised to benefit when the market recovers because many of its smaller competitors have gone out of business, larger public builders do not compete in the luxury market and few companies have land ready to develop, Yearley said.
Toll added almost 3,000 lots to its inventory in the most recent fiscal year, the first increase since 2005.
"We're setting up for the next cycle," Yearley said.
"Housing brought this country down, and we need housing to bring this country back."
