Toll Brothers CEO says the drop in 'crazy high' lumber prices will save $40,000 per home
Doug Yearley, CEO of luxury homebuilder Toll Brothers, told CNBC on Wednesday that lumber prices coming off record highs will serve as a tailwind in the face of other "cost pressures."
"Lumber is down $40,000 a home. We're going to see the benefit of that in the second half of '22," Yearley said on "Mad Money." "[Lumber] got crazy high. We knew it would come back," he added. "We've been very happy with how quickly it's come back. I think it's going to stay down."
In May, lumber prices hit an all-time high of over $1,700 per thousand board feet, an explosive surge from a pandemic low below $300 less than a year earlier. Lumber settled around $500 on Wednesday.
"The tailwind of lumber coming down is very comforting," Yearley told CNBC's Jim Cramer, a day after the company reported better than expected fiscal third quarter earnings. "It's going to help us. It's going to drive some margin. But I think it's going to offset some of the other cost increases that we're feeling."
"It's taken us a little longer to build these houses. There are real supply chain issues. There's labor issues," Yearley said. "It took about two weeks longer in our third quarter to deliver a home. We expect that to continue for a couple more quarters as we manage through it."
Shares of Toll Brothers rose more than 4% on Wednesday to $63.66 each. The stock is up more than 46% so far this year.
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