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During their earnings call this week, Toll Brothers CEO Douglas Yearley was asked by analysts where the giant luxury homebuilder—whose average home price in its backlog is $1,078,700—is seeing regional housing market strength and where it is observing weakness.
Nationally, Yearley said the publicly-traded homebuilder is experiencing “broad-based strength around the country,” particularly in Northeast housing markets like Boston and Washington, D.C. In the fourth quarter ending October 31, the homebuilder sold 2,658 homes, up 30% from the 2,038 homes signed under contract during the same quarter last year.
When it comes to softness and weakness, Yearley pointed to Austin, San Antonio, Phoenix, and most of Florida.
“There is still some softness in Austin that is driven by affordability because Austin prices ran and ran and ran through COVID.” Yearley said. “And so there’s a bit more affordability pressure there with the higher prices. And then San Antonio, which is a very small market for us, has also been a bit softer. Out West, all good, the only market that we have a little bit of caution on is Phoenix, where inventories are up a little bit… And then the one I am saving for last is Florida. The good news in Florida is [that] Jacksonville has been very strong, but the other markets in Florida have seen some elevated inventory levels.”
All of those weaker housing markets have experienced active housing inventory for sale—something ResiClub tracks for every U.S. county and metro—climb back above pre-pandemic 2019 inventory levels.
Will these weaker housing markets see additional weakening in 2025?
“We're keeping an eye on Florida. The winter season is just beginning as the snowbirds are arriving, but that's probably our most cautionary market in the country,” Yearley said.
For homebuyers in Austin, San Antonio, and Florida, this shift means they’ve gained leverage in negotiations—especially compared to the boom times during the pandemic.
“I am beginning to see buyers have far more negotiating power than we have seen since the pre-Covid period," Joseph Nichols, broker and owner of Ruulio Mortgage in Fort Lauderdale, tells ResiClub. "These inventory levels have significantly improved the buyers ability to negotiate on purchase price and seller concessions; all the while simply giving them more initial options to pick from."
Many are happy about the change, he says. "This is a far cry from the past few years and a change, I believe, everyone in Florida real estate is happy to see," he notss. "We shouldn’t forget sellers are buyers, and they are often just buying another Florida residence. Well, everyone is happy other than home builders who live and die by the purchase price of their new builds. We will see how net migration into Florida is in 2025 and whether this current inventory level will hold up.”
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