Doug Yearley has run Toll Brothers, one of the largest homebuilders in the country, for 36 years. He's been through more housing cycles than most people in this business. So when he told investors last week that he's starting to see "the light at the end of the tunnel," it's worth paying attention to why.

Toll Brothers reported earnings last week, and things are still tough out there. Yearley said sales have been "subdued" the past few months, with high mortgage rates and shaky buyer confidence still weighing things down. So he didn’t sugarcoat things like executives often do during rough quarters.

But he also said this:

In other words, worst of the downturn looks like it's behind us, even if the rebound hasn't fully shown up yet.

Builders are making less profit on each home they sell than they used to. This is mostly due to having to cut prices and offer massive incentives to keep buyers interested. That's true across almost the entire industry right now. Among the 15 biggest homebuilders in the country that ResiClub tracks, 13 of them are still making less profit per home than they did a year ago.

Three months ago, all 15 builders were in that same spot. Now it's down to 13, and comparing this quarter to the one right before it, only 4 of the 15 saw their profit per home shrink further. So the most builders are starting to see their margin compression level off.

Toll Brothers' own numbers from their quarterly earnings show the same pattern. They're still making less profit per home than a year ago, but compared to last quarter, their numbers held steady. Sales also picked up, with new home orders up 5% from a year ago.

Now if you’re reading this, you’re probably not a fortune 500 builder. So you might be wondering why this matters. The reason we track how builders are doing and their outlook is because a huge portion of Utah’s inventory is new construction. And in real estate, the data we rely on to measure how the market is performing is often backward looking. Forward looking data like consumer sentiment, builders outlook based on new orders, and more helps us paint a picture of where the market might be headed.

For Utah specifically, Toll Brothers breaks out its home sales by region, and Utah got a special shoutout. The Mountain region, which includes Utah, Arizona, Colorado, Idaho, and Nevada, had the strongest growth in new home orders of any region in the country. Orders were up 12.3% from a year ago, ahead of every other part of the U.S.

That just means that they’re seeing more demand pick up in our region than anywhere else.

Builders are still working hard to earn your business. Depending on the development, Toll Brothers is currently offering incentives worth around 7.5% of a home's sales price, which includes things like rate buy-downs, price cuts, and closing cost credits. That’s $45K worth of incentives on a $600K home. Some builders are offering even more.

As demand keeps picking up, especially here in Utah, those incentives won't stick around forever. If you've been waiting for a clearer sign that now might be a good time to move, this is one.

Curious what incentives are available on new construction near you? Reply with what areas you’re most interested in and I'll find out.

Competing with new construction has been a real challenge these past few years, and that's not going away overnight. But the pressure builders were under to keep cutting deeper and offering more incentives has eased. A major national builder seeing stronger demand in our region is a good sign for the market you're selling into.

If you already tried selling your home once before and it didn't sell, that doesn't mean something is wrong with it. Often it just needs a fresh look at pricing or presentation, which is exactly the kind of thing I help sellers work through every week, and I'm happy to take a look at yours.

Thinking about listing, or have a home that didn't sell the first time around? Let's talk and see if we might be a good fit.

Here to serve,

P.S. Curious what your home is worth in today's market? Just reply with your address and I'll put together a custom analysis for you, no obligation.