June 3 (Bloomberg) -- Toll Brothers Inc., the largest U.S. luxury homebuilder, reported a narrower second-quarter loss after writedowns for land, developments and options fell by almost $170 million.

The net loss for the three months ended April 30 shrank to $83.2 million, or 52 cents a share, from $93.7 million, or 59 cents, a year earlier, the Horsham, Pennsylvania-based company said in a statement today. Toll was projected to post a loss of 45 cents a share, according to the median of 12 analysts in a Bloomberg survey.

Toll, the third-worst performing U.S. homebuilding stock this year, has lost almost a third of its value since 2006 as the housing slump and the recession have cut demand. Toll reduced the price of its homes and offered buyers incentives in an effort to halt a slide in revenue.

“With interest rates near historic lows and housing affordability near historic highs, it appears that some buyers are beginning to re-enter the new-home market,” Chairman and Chief Executive Officer Robert Toll said in the statement.

The Standard & Poor’s Supercomposite Homebuilding Index is down 27 percent in the year through yesterday as the housing slump, rising unemployment and record foreclosures cut demand. New home sales in the U.S. fell 34 percent in April from a year earlier, the Commerce Department said May 28. The median price dropped 15 percent, while foreclosure filings increased to a record 342,038.

Smaller Charges

Pretax charges for writing down the value of Toll’s land and communities, as well as options on land the company no longer wants to buy, fell to $119.6 million from $288.1 million a year earlier, Toll said today.

Toll expects to sell between 2,200 and 2,800 homes in fiscal 2009 at an average price of $590,000 to $620,000, Chief Financial Officer Joel Rassman said in the statement. In the second half, sale prices are likely to average between $580,000 and $600,000, he said.

In December, Rassman estimated sales for the fiscal year of between 2,000 and 3,000 homes at an average of between $600,000 and $625,000.

Halted Projects

Toll plans to “mothball” several communities with slow sales, Robert Toll said last month. The company will continue to sell the model homes there and eliminate the sales and grounds staff. It will hire contractors to maintain the properties “until market conditions improve.”

Revenue in the second quarter fell 51 percent to $398.3 million from a year earlier, Toll said last month. The number of homes sold slumped 47 percent to 648, while the value of the company’s backlog, or homes under contract and not yet sold, slumped 55 percent to $944.1 million from a year earlier.

The cancellation rate for the second quarter improved to about 22 percent from 25 percent a year earlier. The company last month paid $304 million to redeem all but $50 million of its debt maturing in 2011.

Toll rose 73 cents, or 3.9 percent, to $19.53 in New York Stock Exchange composite trading yesterday. The shares are down 6.8 percent in the year through yesterday.

Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, reported a second-quarter net loss of $118.6 million, or $1.50 a share after the market closed yesterday. The Red Bank-based company was projected to have a loss of $1.32 a share, according to the median forecast of six analysts in a Bloomberg survey.

Hovnanian has “seen more stability in home prices over the most recent six weeks,” President and Chief Executive Officer Ara Hovnanian said in a statement.

To contact the reporters on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net; Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

Last Updated: June 3, 2009 07:38 EDT