The nation's largest builder of luxury homes said that while the market "is still tough," it sees improvements "in many places."
Toll Brothers had net income of $3.4 million, or 2 cents per share, for the quarter ended Jan. 31. That compares with a loss of $40.8 million, or 25 cents per share, a year earlier.
Analysts surveyed by FactSet forecast a loss of 8 cents per share.
The quarter included a $20.4 million tax benefit compared with a $16 million tax benefit a year ago.
Revenue climbed 2 percent to $334.1 million from $326.7 million, besting Wall Street's $317.7 million.
Toll's average price for delivered homes rose 7 percent to $586,000, while signed net contracts increased 5 percent to $307.2 million.
Net signed contracts per community climbed 7 percent to 2.81 units, which was a strong improvement from the same periods in 2008 and 2009. Still, Toll said the results were well below first-quarter average of 5.06 net signed contracts per community from 2001 through 2010.
Toll ended the quarter with a backlog of 1,472 units, up 1 percent.
Toll, based in Horsham, Pa., said Wednesday its cancellation rates have returned to historic norms. Cancellation rate as a percentage of contracts was 5.7 percent.
CEO Douglas C. Yearley Jr. said in a statement that so far there is no urgency among buyers. Many would-be homebuyers continue to be put off by high unemployment, uncertainty over home prices and weak consumer confidence in the economy.
But Yearley said that conditions seems to be getting better in certain markets, such as Texas, the metro Washington, D.C.-to- metro Boston corridor and its metro New York City urban projects.
Toll Brothers has operations in 19 states. Its customers are typically buyers who already own a home and are generally looking to trade up to a property with more high-end amenities. Some are in the market for a second home or want to live in a community geared to seniors.
"The industry needs to string a few good quarters together to create confidence. Improved confidence will pull customers off the fence and into the market, creating volume and pricing power," Executive Chairman Robert Toll explained.
Toll said the company is cautiously optimistic heading into spring, which is traditionally the strongest season for home sales.
Homebuilders are a bellwether for the housing market and the economy. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates.
Last year, builders got a spring sales lift. This year, however, they won't have the aid of federal homebuyer tax credits to spur sales.
"We believe demand is increasing somewhat in certain markets, and that eventually, this demand will bump up against constrained supply," Toll said.
