Skip navigation
Watchlist Sponsored By :
  • 10 States for Cheapest Gas

      With consumers feeling the pain at the pump this summer, what states rank among the cheapest for a gallon of regular unleaded on average?

  • 10 Recession-Proof Jobs

      Despite a slowing economy and layoffs in many industries, certain professions remain in high demand and are expected to weather a recession better than others.

  • Stock Picks for Your 20's

      The sinking stock market is enough to scare off most investors, let alone those in their 20s. Here are picks for Twenty-Somethings using a five year time horizon.

  • Texas is Tops in 2008

      Texas knocked out last year's top state for business, Virginia. How did your state fare in our annual study?

  • Powering the Planet

      Energy has become the most common denominator in the global economy. Ultimately, it may be the great unifier. After all, imagine a world without energy, affordable energy.

  • Apple & The New iPhone

      Second acts should not be taken for granted. Apple and Steve Jobs have yet to make that mistake and they're unlikely to do so with the launch of the new iPhone.

By Greg Levine Web Editor | 27 Feb 2008 | 03:45 PM ET
Font size:

Toll Brothers reported a first-quarter loss Wednesday: the homebuilder announced a huge jump in write-downs on properties it could no longer sell profitably; and its sales fell 23 percent.

So why did the company’s shares [TOL  Loading...      ()   ] climb as much as 2.21 percent Wednesday?

Toll Brothers – and key sector rivals like KB Home [KBH  Loading...      ()   ] and D.R. Horton [DHI  Loading...      ()   ] -- can in part thank the Office of Federal Housing Enterprises Oversight, which lifted the portfolio caps on Fannie Mae [FNM  Loading...      ()   ] and Freddie Mac [FRE  Loading...      ()   ]. The OFHEO’s move will allow the government-backed lenders to hold billions of dollars more in mortgages – potentially revving up home selling and building activity.

Another positive stimulus: Lehman Brothers analysts issued a research note calling for home-sales trends to strengthen over the next two quarters.

"Attractive investment opportunities do exist in this space. In our view the builders that have been able to generate the most cash flow while also maintaining the healthiest balance sheets are KB Home, Toll Brothers and D.R. Horton. …Currently we prefer companies with healthier and conservative balance sheets and proven return histories,” the note said.

Lehman Brothers initiated coverage of Toll Brothers shares on Wednesday with an “overweight” rating.

CNBC’s senior economics reporter Steve Liesman maintains that “The mortgage market remains risky,” but said of the OFHEO’s move: “This should help. It can’t hurt.”

“What’s unique in this downturn is that Fannie Mae and Freddie Mac should have been playing a role in helping markets…counter-cyclically. After [the cap lift], they can now do so,” he said.

© 2008 CNBC.com

HOME  |  NEWS  |  MARKETS  |  EARNINGS  |  INVESTING  |  VIDEO  |  CNBC TV  |  CNBC PLUS  |  CNBC HD+
About CNBC   |   Site Map   |   Privacy Policy   |   Terms of Service   |   Advertise   |   Help   |   Feedback   |   Video Reprints
  Data is a real-time snapshot   *Data is delayed at least 15 minutes

Global Business and Financial News, Stock Quotes, and Market Data and Analysis