A report from MarketWatch. "Shares of Toll Brothers Inc. dropped Tuesday, after the home builder reported fiscal fourth-quarter earnings and revenue that beat expectations but said the housing market slowed further in November, particularly in California. Chief Executive Douglas Yearley said that despite a healthy economy, there was a 'moderation' in demand during the quarter, as contracts declined 15% in dollars and 13% in units."

"'In November, we saw the market soften further, which we attribute to the cumulative impact of rising interest rates and the effect on buyer sentiment of well-publicized reports of a housing slowdown,' Yearley said. 'California has seen the biggest decline.'"

From CNBC. "First quarter guidance from Toll Brothers was weaker than expected, with a deliveries range that was markedly below Wall Street's expectation, according to FactSet."

"Yearley said the company 'saw similar consumer behavior beginning in late 2013, when a rapid rise in interest rates temporarily tempered buyer demand before the market regained momentum.' Known as the taper tantrum, rates jumped in 2013 when the Federal Reserve signaled a reduction of money being put into the economy, leading to a surge in mortgage rates. Home sales recovered, however, when mortgages rates fell back again."

"Some economists fear this time will be different. Lawrence Yun, chief economist for the National Association of Realtors, said in November that "'this time, interests rates are not going down.'"

"'In fact, they are probably going to increase even further,' added Yun."

From Reuters. "Toll, whose homes can cost upwards of $2 million, said orders, a key indicator of future revenue, dropped 13.3 percent to 1,715 units in the quarter ended Oct. 31, against the 6.5 percent rise expected by analysts."

"Orders fell the most in California, Toll’s biggest market by revenue, declining 39.4 percent to 226 units in the quarter, the company said. 'Significant price appreciation over the past few years, fewer foreign buyers in certain communities, and the impact of rising interest rates, all contributed to this slowdown,' Chief Executive Officer Douglas Yearley said, referring to the California market."

"'We continue to find Toll in a particularly difficult position given its high California exposure, with unsustainably high gross margins in the state,' Barclays analyst Matthew Bouley wrote in a note."

"Analysts also said Toll’s margins may have been hurt by higher marketing incentives offered by the company to lure buyers. Last month, No.1 U.S. homebuilder D.R. Horton also said it was seeing a rise in incentives in the face of choppy demand as it forecast first-quarter home sales below analysts’ estimates."

"Toll forecast first-quarter homes sales in fiscal 2019 between 1,350 and 1,550 units, below the 1,554 units expected by analysts on average, according to IBES data from Refinitiv. The company did not provide a forecast for the full year, citing uncertai"n demand.