TOL shows a consistent pattern of breaking out and then retreating temporarily to that break-out support. The most recent break-out was at the end of March (see charts 1 and 2). The zoom chart shows that TOL has declined 13% in 3 days and is right back to support from the March break out and the 2021 uptrend line.
TOL has always been a favorite of TPA, but chart 3 shows that it is at a critical inflection point versus ITB (the Homebuilder ETF). The ratio TOL/ITB is breaking out of a 12-year downtrend. Chart 4 zooms in on the recent move above the long-term downtrend. This a relative positive for TOL; indicating it will continue to outperform the group.
One fear for house buying and home builders is always an increase in rates. TPA has always argued that the level of rates has a long way to go before it dampens demand. Chart 5 shows that as rates have risen, so has TOL.
TPA has been a consistent champion of home building, house prices, and the housing market, in general, since 2019 and remains bullish for the long term. As TPA has repeatedly explained, the supply-demand imbalance in the U.S. will take years and probably decades to resolve.
Below are World Snapshot reports 2019-2021:
- 10/21/19 The Homebuilder Rally Is Built For The Long Term
- 3/12/20 House Prices Should Remain Stable For The Long Term
- 2/23/21 Home Building Is Only At The Beginning Of A Long-Term Comeback