"We feel good about it and for the moment, we believe it indicates a better market coming," said Robert Toll, the builder's chairman and chief executive.
Despite perked-up homebuyer interest, the Horsham, Pa.-based company's homebuilding revenue fell by about half in the fiscal second quarter ended April 30. And new home orders plunged 37 percent versus the same period last year.
Toll said it sold 648 homes totaling $398.3 million in revenue. And while the number of homes sold fell 47 percent from the second quarter last year, it was more than double first-quarter sales. The number of buyers who got cold feet also declined. Toll said its cancellation rate was almost 22 percent in the quarter versus about 25 percent in the first quarter, and 37 percent a year ago.
Toll's positive outlook was also reflected in data Tuesday that showed new home construction rose 2.8 percent in April, and building permits for single-family homes climbed 3.6 percent over March levels.
Investors appeared unimpressed, pushing the builder's shares down 34 cents to $19.17 in afternoon trading.
Still, there are a few reasons the real estate recession, now in its third year, may not be ending.
In a statement, Chief Financial Officer Joel Rassman underlined the "significant uncertainty surrounding sales paces, cancellation rates, market direction, unemployment trends" that are preventing the company from forecasting future profits.
Toll Brothers will release final quarterly results on June 3, and analysts surveyed by Thomson Reuters expect a loss of 33 cents a share on revenue of $386.7 million.
The company estimated it will have to write down the value of its residential communities, land holdings and joint ventures by between $90 million and $160 million for the second quarter.
Those costs were lower than several analysts predicted, and Credit Suisse analyst Daniel Oppenheim also noted that Toll is generating "solid cash flow while maintaining substantial dry powder to cushion against further weakness..."
Toll ended the quarter with $1.96 billion in cash.
For the first half of its fiscal year, building revenues totaled an estimated $807.3 million, also down about half from the first half of 2008. Toll sold 1,313 new homes, down 46 percent.
Get Action News on your website
