Toll Brothers' Strong Quarter Masks Weak Development Outlook

• Taking its Toll: The Toll Brothers earnings report gave a glimmer of hope for developers but the number of permits in the pipeline is troubling.

• Across the board attack: Trump has escalated his attacks on the Fed, urging a governor to resign over alleged mortgage fraud.

• New work, old building: Ford has redesigned one of its historic lab spaces to keep up with the changing needs of the modern workforce.

• Office-to-residential conversion: Webinar on data-driven metrics and insights for profitable office-to-residential conversions. Sign up

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Editor’s Pick

Toll Brothers’ Strong Quarter Masks Weak Development Outlook

Things are starting to look up for developers, at least for now. One of the country's largest home builders, The Toll Brothers, beat expectations in its third-quarter earnings, posting nearly $2.9 billion in revenue and a profit of $369 million. Strong sales in its luxury portfolio helped push its adjusted earnings per share above analyst estimates, a welcome sign of resilience in a market defined by uncertainty. But the fine print wasn’t as rosy. Backlogs were down 10% and cancellations ticked higher, suggesting that while demand today looks good, the future pipeline is weakening.

That theme tracks closely with the latest national housing data. July housing starts surprised to the upside, jumping by as much as 12.9% compared to a year ago. The boost came largely from multifamily projects, many of which had been in the works for months. On the surface, it looked like a surge in activity. But a closer look at building permits tells a different story. Permits, the better forward-looking indicator, fell between 5 and 7%. Single-family permits were particularly weak, dropping around 8%. Builders might be breaking ground on projects that were already in motion, but they are filing fewer new ones.

This push and pull is exactly what Toll Brothers’ earnings reveal. The company has been able to capture current demand, especially from higher-income buyers less sensitive to mortgage rates, but it is also feeling the effects of a market where confidence about the future is fragile. The recent spike in starts might keep crews busy in the short term, but unless permits begin to rebound, it points to a slowdown in the next phase of development. A shrinking backlog at Toll is essentially the same signal the permit data is giving across the industry.

For real estate, the implications are significant. Developers, investors, and landlords cannot assume that today’s demand will automatically translate into tomorrow’s supply. Multifamily pipelines are still moving, but the single-family side—where Toll Brothers is most exposed—looks set for a contraction unless economic conditions shift. The direction of interest rates will play a decisive role, as will the ability of builders to manage costs and offer incentives without eroding margins. Toll’s luxury focus gives it some insulation, but not immunity.

The big takeaway is that the housing market is still in limbo. Earnings beats and headline-grabbing start numbers may give the impression of strength, but the deeper indicators are flashing caution. For those watching the future of housing development, it is not enough to track how many homes are being built right now. The real story is in how many projects are getting permission to break ground. Without a turnaround in permits, the optimism in Toll Brothers’ latest quarter may prove to be temporary.

Overheard

Trump Broadens His Fed Offensive

President Trump has turned up the heat on the Federal Reserve again, this time targeting Governor Lisa Cook. A Trump ally, Bill Pulte of the FHFA, has requested that Attorney General Pam Bondi investigate Cook over allegations that she misrepresented her primary residence on mortgage applications. The president amplified the accusation on Truth Social, saying she “must resign now.” This is might be more than a personal attack, it could be part of a calculated move to reshape the Fed board.

Trump began his campaign against Fed independence by criticizing Chair Jerome Powell—calling for his resignation or removal over interest rate policy disagreements. Now he’s widening that campaign to other board members, aiming to replace them with more compliant voices. If Cook were forced out, Trump could install another governor aligned with his view that interest rates should come down, further tilting the board in his favor.

The implications for the Fed’s independence are huge. Powell’s chairmanship expires next year but even a new Chair would need to have future cuts approved by 7 out of the 12 voting members of the board. Cook is one of those voting members. Fed governors serve long terms, Cook’s runs through 2038. The only way she can be removed is “for cause,” and even legal experts caution that allegations of fraud must meet a high bar. In the meantime, Trump’s nominee for the board, Stephen Miran, waits in the wings, while dissenters like Governors Bowman and Waller are already pushing for rate cuts, creating a fractured board and signaling a policy shift.

Looking ahead to the appointment of a new Fed chair, this maneuvering suggests political loyalty could become a greater factor than central banking orthodoxy. The chair controls the narrative and the markets—but if the board is packed with vetted allies, their votes could override the chair’s independence. What matters most now isn’t just who sits at the top, but who holds the power in the room when decisions are made. Whoever occupies the chair next must not only face market expectations, but also navigate a board increasingly beholden to political pressure.

Old Buildings Can Still Learn New Tricks

Ford has turned an over-century-old engineering lab—the kind of white-limestone, vaulted-ceiling relic most companies would raze—into a model for the office of tomorrow. What was designed back in 1924 for product development has been retrofitted with all the tools for today’s hybrid, Gen Z-friendly workplace. The company sees it as a template for how its 300 million square feet of global offices could reinvent themselves.

The redesign blends heritage and history with cutting-edge functionality. Ford’s engineering lab still bears the marks of its past, but in its bones it now supports flexible work zones, collaborative nooks, modern lighting, and probably better air handling—all those staples of the modern workplace. The designers of the workspace were able to keep the warmth of character without sacrificing speed, connectivity, or comfort.

The same strategy could save thousands of older buildings from demolition. Old buildings with smart retrofits don’t just save bricks—they offer soul, sustainability, and a sense of place. The bigger lesson for developers and city planners is that renovating is more than nostalgia. It signals intent—that an office can still anchor a neighborhood or a corporate ethos decades later. With the right amenities and purposeful design, "vintage" buildings can compete with glass-and-steel towers on both charm and efficiency.

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