by Calculated Risk on 5/23/2006 02:59:00 PM

From Dow Jones: Housing Downturn Taxes Toll Brothers

Toll Brothers ... slashed guidance for fiscal 2006 as the company continues to struggle with sluggish sales and big inventories.
...
Toll blames the weak market conditions on big inventories in the market ... Exacerbating the situation further is a surge in cancellations and a glut of speculative homes built by home builders sitting in the market.

"We believe that once this excess inventory is absorbed, demand should once again exceed supply," Toll said. When this happens, "we believe those buyers who have been on the sidelines will come back into the market and prices should start to rise again."
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Banc of America analyst Daniel Oppenheim, who rates the company at sell, is skeptical demand will rebound in the second half of fiscal 2006.

"We remain concerned that supply has not slowed sufficiently to result in improving inventory levels and expect the slowdown may impact the market far longer," Oppenheim said.

I expect inventories to continue to rise all summer. And sales to continue to fall.