(Bloomberg) — Toll Brothers Inc. reported better-than-expected order growth, signaling that the housing rebound in the midst of a pandemic is spreading to luxury properties.
Purchase contracts for the three months through July jumped 26% from a year earlier to 2,833, the builder said in a statement Tuesday. The average estimate of analysts surveyed by Bloomberg was 1,980. Net income was 90 cents a share, beating the consensus estimate of 70 cents.
Toll’s orders were the highest ever for its fiscal third quarter, in both the number of homes and dollar value, Chief Executive Officer Douglas Yearley said in the statement. That strength has continued into August, he said.The company’s customers are relatively wealthy so they’re least likely to be sidelined by tightening credit or job losses, which have been concentrated in the service sector and other lower-paid industries.Armed with low mortgage rates, Americans are moving from cities to suburbs and rural areas where they can have backyards and room for home offices. Toll has plenty of spacious offerings to meet their needs.Toll is much larger than most other luxury-focused builders, giving it a competitive advantage. But the company faces challenges, with lumber prices reaching records and labor costs still high. The injection of federal stimulus cash and a mortgage-forbearance program have masked potential hurdles for future buyers.
Toll’s shares rose as much as 4.9% in late trading. They have climbed 17% this year, trailing an S&P index of homebuilders, which has gained about 30%.
The company expects to deliver 2,400 to 2,550 homes in its fiscal fourth quarter with an average price of $815,000 to $835,000. The adjusted gross margin will be about 21.5%, Toll said.Click here to read the earnings statement.Sales of newly built homes across the U.S. jumped to an almost 14-year high in July, government data showed Tuesday.
(Adds guidance for fiscal fourth quarter in the ‘Get More’ section.)
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