PHILADELPHIA -- In a possible sign of trouble for the housing industry, luxury home builder Toll Brothers Inc. cut its sales forecast for fiscal 2006 yesterday, citing delayed openings for new developments and weakened demand in several markets.
Toll Brothers' shares tumbled nearly 14 percent in trading and the news pushed down share prices for many large homebuilders as Wall Street, already nervous about the health of the housing sector, was rattled by the news. KB Home fell 5.5 percent and Pulte Homes Inc. lost 8.9 percent.
A national housing sector index, a benchmark maintained by the Philadelphia Stock Exchange based on share prices for 21 companies in the US housing construction market, closed down 5.4 percent.
The strong housing market is widely credited for having supported the economy for some time, but concerns about its sustained health have been increasing along with the upward creep of mortgage rates. The Philadelphia exchange's index is down 18 percent from its midsummer peak.
Rates on 30-year mortgages have climbed to the highest level in 16 months, and have been above 6 percent for the past month.
Toll Brothers, based in Horsham, Pa., projected home sales at 9,500 to 10,200 homes in fiscal year 2006, down from an earlier target of 10,200 to 10,600 homes. In fiscal 2005, it reported 8,769 sales.