Nov. 11 (Bloomberg) -- Toll Brothers Inc., the largest U.S. luxury homebuilder, said fourth-quarter revenue plunged 41 percent as the housing and credit crisis pummeled its business.

Homebuilding revenue slid for the 10th straight quarter, dropping to $691 million in the three months ended Oct. 31 from $1.17 billion a year earlier, Toll said today in a statement.

``Unfortunately, the preliminary signs of stability we had discussed in early September during our 2008 third quarter earnings call were upended by the past month's financial crisis,'' Chief Executive Officer Robert Toll said on a conference call with analysts. ``People are just lacking confidence in the housing market.''

Toll urged the federal government to act swiftly to help the housing market and recommended Congress cut mortgage rates and enact a buyer tax credit. Home prices slid 17 percent in 20 U.S. metropolitan areas in August as foreclosures rose, according to the S&P/Case-Shiller price index, and foreclosures reached the highest on record in the third quarter.

The Horsham, Pennsylvania-based builder was projected to have sales of about $647 million, according to the average estimate of 13 analysts surveyed by Bloomberg.

Shares Down

Shares fell 2 cents to $18.93 in New York Stock Exchange composite trading. They're down 5.6 percent this year, compared with a 38 percent drop in a Standard & Poor's measure of 15 home construction companies.

Fourth quarter cancellations rose to 233, or 30 percent of contracts, the company said. Net contracts signed fell 27 percent to $266.7 million for 539 homes, a drop of 18 percent.

For all of fiscal 2008, Toll closed on 4,743 homes, the lowest since 2002.

``The government's efforts must concentrate on stopping the decline in home prices by bringing potential buyers back into the market,'' Robert Toll said on the call.

Pretax writedowns in the fourth quarter will be between $120 million and $220 million, Chief Financial Officer Joel Rassman said in the statement. Toll is ``not comfortable'' giving guidance on revenue, earnings and the number of homes it will deliver in the current fiscal year, Rassman said.

``You've got a lot more uncertainty out there,'' Dave Crossman, an analyst at Kirr Marbach & Co. in Columbus, Indiana, said in an interview. ``You're just seeing people in hunker-down mode right now.''

Kirr Marbach owned about 373,000 Toll shares and had $361 million under management as of Sept. 30.

Toll got the most revenue in the fourth quarter from the region that includes Illinois, New York and New Jersey.

New York City Slumps

Housing demand in New York City, which had been a ``beacon,'' has slumped in the past six weeks, Robert Toll said.

``It has now joined the ranks of the rest of the country,'' Robert Toll said.

Demand for housing should increase in the Washington D.C. area with the arrival of people who will work in the administration of President-Elect Barack Obama, Robert Toll said.

The average price of net signed contracts fell 11 percent to $495,000 from a year earlier as buyers canceled more expensive homes. The average price of homes canceled in the quarter was about $785,000.

The value of the company's backlog, or homes under contract and not yet sold, fell 54 percent to $1.33 billion and the number of homes in the backlog fell 48 percent to 2,046 at the end of the quarter.

Toll ended the year with $1.63 billion in cash and $1.32 billion available under a credit agreement that expires in March 2011, Rassman said in the statement.

Builder Losses Mount

The five largest U.S. homebuilders reported a combined $1.09 billion in losses in their most recent quarters as consumers had difficulty obtaining mortgages. About 70 percent of U.S. banks surveyed indicated they tightened standards on prime mortgage loans, the Federal Reserve said on Nov. 3 in its quarterly Senior Loan Officer Survey. That was down from 75 percent in the previous survey.

D.R. Horton Inc., the largest U.S. builder, said on Nov. 4 it expects to report a fiscal fourth-quarter loss of as much as $900 million as rising foreclosures deepen the housing recession. Foreclosure filings increased 71 percent in the third quarter from a year earlier, according to Irvine, California-based RealtyTrac.

The U.S. unemployment rate rose to the highest level since 1994 as companies cut jobs to cut costs as the economy slowed, the Labor Department said on Nov. 7. The jobless rate rose to 6.5 percent in October from 6.1 percent the previous month.

Toll, which started building homes in 1967 and first sold shares to the public in 1986, is scheduled to report complete quarterly results on Dec. 4.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net; Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

Last Updated: November 11, 2008 16:21 EST