Deborah Yao
Associated Press

A strong economy will spark a housing-market rebound after excess inventory from speculators is shaken out, perhaps very soon, the chief executive of the nation’s largest luxury-home builder said Thursday.

At a meeting with analysts in New York, Robert Toll of Toll Brothers Inc. said pent-up demand will drive the housing market after the current housing slowdown passes. Demand will be driven by buyers who are biding their time waiting for better incentives or lower prices.

Once they see growth in home prices start to accelerate again, they will come back, he said.

“The next great story is pent-up demand,” he said. “Once the natural balance is restored in the market, you’re going to see prices go up again. Prices are going to go up quite a bit.”

Late last year, Toll Brothers partnered with Meritage Homes and mall developer Simon Property to pay $312 million for DaimlerChrysler’s proving grounds in the northwest Valley. As many as 30,000 new homes could go up on the 5,500-acre site when growth reaches it in the next few years.

The land is between Arizona 74 and U.S. 60 near the small community of Wittmann on the way to Wickenburg.

Toll said Thursday that he based his optimism on the strength of the economy but cautioned that it’s contingent on the Federal Reserve keeping it healthy.

“Right now we’ve got a pretty great economy out there,” he said.

“Jobs are growing every day. Sooner or later, it will back itself into homes.”

Toll also said mortgage rates, currently at an average 6.67 percent for a 30-year fixed home loan, aren’t a major factor in the housing slowdown because they still hover near four-decade lows.

“We did business at 8.5 (percent), and it was fabulous,” he said. “Now it’s 6.5.”

Toll believes the second-home market will stay particularly robust as Baby Boomers look to move to Sun Belt states or urban centers with rich culture and entertainment.

Horsham, Pa.-based Toll Brothers said it could more than double sales to 20,000 homes a year by boosting its market share to 3 percent in cities where it already has a presence.

The company said it holds a 1.4 percent share in the Midwest and 1.1 percent in the West. In the Northeast, market share is 5.6 percent. In the South, it’s 3.3 percent.

But even as Toll Brothers expands, its stock price has been pummeled.

Shares of other home builders have been hammered as well as the housing slowdown took hold.

The company said the low valuation could spark acquisitions in the industry.