Toll Brothers CEO Sees Real Estate Growth

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"Last time I saw 6 percent was 1966, except for the last couple of years," Robert Toll, the company's chairman and chief executive, said Wednesday in an interview with The Associated Press. "If rates go to 7.5 percent, we'll take it. We can still do a whole lot of business."

This week, the average rate for a 30-year, fixed-rate mortgage came to 6.37 percent with 0.6 point, according to Freddie Mac. Rates have been in the 5 percent to 7 percent range since 2001. Before that, they were last around 6 percent in the early to mid-1960s, the mortgage agency said.

On Thursday, housing stocks also got a boost from news that the number of new homes under construction didn't fall as much as expected in February. The Philadelphia Housing Index rose by 1.4 percent in afternoon trading.

On the New York Stock Exchange, shares of Toll Brothers rose $1.29, or 3.9 percent, to close at $34.18; shares of homebuilder KB Home rose $1.62, or 2.5 percent, to $66.74; and shares of homebuilder Centex Corp. rose 90 cents, or 1.4 percent, to $64.90.

While the housing market has slowed in the recent months from its red-hot pace as prices have risen, demand has stayed healthy as the economy remained resilient.

With inflation remaining tame, Toll believes new Fed Chairman Ben Bernanke "will probably err on the side of caution and not overexuberance" when setting targets for short-term interest rates.

Toll, who has been in the real estate business for four decades, agrees with industry pundits who predict a "soft landing" ahead for housing.

He bases his belief on the mixed results he's seeing at his communities _ he can still raise prices at certain properties in several markets. In past housing downturns, he said, pricing power generally was weak across the board.

"I truly believe it's going to be soft. In selected markets, for selected locations ... you still have pricing power," he said. "If this is a hard time, I'll take it. I'll keep it."

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