The financial media is reacting to the Toll Brothers guidance. "If you don't think the housing market has cooled off dramatically, just ask Robert Toll. 'Selling homes this first quarter was certainly more difficult than one year ago,' said CEO Toll. He noted that 'we experienced softening demand in a number of markets.'"

"Toll Brothers, the largest U.S. builder of luxury homes, said fiscal first-quarter orders plunged 29 percent. 'The higher-end buyers are beginning to realize they don't have to rush in, that maybe if they hold out prices will moderate,' said John Tomlinson, a housing analyst. Toll's shares fell as much as 5.8 percent and dragged other homebuilders lower. Toll's stock has lost half its value since July on concern sales of its $700,000 houses will be hit harder by rising mortgage rates than cheaper homes."

"In a fresh piece of evidence that the housing market is cooling, homeowners paid off their mortgages at the slowest pace in almost three years, Washington-based Fannie Mae, the biggest home lender, said today. 'The Toll Brothers data is telling us that the fairy dust of rising home prices is floating away,' Stephen Roach, chief global economist at Morgan Stanley."

"U.S. homeowners paid off their mortgages at the slowest pace in almost three years as rising prices and interest rates cooled the housing market and builders reported declining orders. 'Rising rates have taken their toll' on consumer refinancing to turn home equity into cash, said Akiva Dickstein, head of mortgage research at Merrill Lynch in New York. 'The housing market is showing some signs of slowdown, and Toll Brothers is evidence of that.'"

Even the Motley Fool is catching on. "From Q4 2004 to Q5 2004 the number of vacant homes increased by 427,000, with vacant for sale up 191,000 and seasonal vacancies up 245,000. With speculation by property flippers, vacation home buyers, and retirement home buyers driving demand for new homes, it is not surprising that the nation produced far more homes than were needed for habitation in 2005. All this is leading to a supply glut that finally is impacting prices."

"Builders loaded up on far too much land (and debt) in recent years and are rushing new developments onto the market in a futile race to unload it before prices fall too far..It isn't surprising that if you build a house where there is already overcapacity you might have a hard time selling it."

"NAR estimated inventory of 2,796,000 existing homes for sale, or a 5.1-month supply in December, which is up by 582,000 (26.3%) year over year. A vacant home is a large cash drain on whoever is stuck holding it."

"Investors in homebuilders, with too much debt and land on their books, and investors in lenders, with too many high risk loans on their books, will be left with substantial losses."