I want my Foolish friends to buy low and sell high, or perhaps to buy high and sell higher. I just hope that those who might have joined the rush to buy homebuilding stocks on Wednesday haven't gotten ahead of themselves.
The builders' heady day was precipitated by comments surrounding Toll Brothers'
As has now become something of a custom for the builders, Toll Brothers' "preliminary" results were released on Wednesday, and a final set of numbers will be issued in two weeks. Revenue in the quarter appears to have declined to $1.21 billion, from last year's $1.53 billion. The company's quarter-end backlog was $3.67 billion -- down 34% year over year -- and its net contracts signed were valued at about $727.1 million, 31% lower than last year.
In December of last year, Toll said that he thought the housing market was dancing along the bottom, or slightly above it. That was just before "subprime" became totally entrenched in our vocabularies, while also becoming the most oft-uttered word on financial network CNBC.
But the optimistic portion of Toll's Wednesday comments -- along with a market that bounced around like a cork in a storm, only to finish up by triple digits on the day -- was enough to light a fuse under most homebuilding stocks. Centex
So maybe there really is an emerging pent-up demand for houses that's about to explode and obliterate a still-sliding credit market. My inclination, nevertheless, is to side with my Foolish colleague Seth Jayson, who admittedly pulled out the housing storm shutters long before I did. With the perpetually Pollyannaish National Association of Realtors still adjusting its sales forecasts downward, I'm not yet ready to emerge from my bunker.
In that spirit, I'll repeat the warning I made a few weeks back: Fools should only assume they've found housing's bottom when it hits them in the face.
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