Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, reported a jump in quarterly sales and orders as prices climbed in a rebounding U.S. housing market.
Revenue for the three months through July increased 24 percent to $689.2 million, the Horsham, Pennsylvania-based company said today in a statement. Orders rose 26 percent to 1,405 homes, exceeding analysts’ estimate for 24 percent growth, Adam Rudiger, an analyst at Wells Fargo & Co., wrote in a note.
A tight supply of existing houses on the market is driving up demand for newly built properties. Toll Brothers, which mainly serves affluent buyers, is less vulnerable than competitors to rising mortgage rates, which have cooled orders at companies including D.R. Horton Inc., said Megan McGrath, a Stamford, Connecticut-based analyst with MKM Partners LLC.
“We are just not hearing that the moving rates has affected our business,” Toll Brothers Chief Executive Officer Douglas Yearley said on a conference call today. “We raised prices more this spring than we did last spring.”
Toll Brothers shares closed little changed at $31.65. The Standard & Poor’s Supercomposite Homebuilding Index fell 0.6 percent after minutes from the Federal Reserve’s July meeting showed officials support reducing stimulus this year if the economy improves, which may lead to higher mortgage rates.
Toll Brothers’s profit fell in the third quarter, hurt by a tax expense of $21.7 million after a benefit of $18.7 million in the prior year. Net income was $46.6 million, or 26 cents a share, compared with $61.6 million, or 36 cents, a year earlier. That matched the average estimate of 14 analysts, according to data compiled by Bloomberg.
Home closings climbed 24 percent to 1,059. The average price jumped to $651,000 from $576,000 a year earlier, boosted by deals at Toll’s luxury Touraine building in Manhattan. Excluding that property, the average price of Toll Brothers homes delivered in the quarter was $612,000.
The penthouse at the Touraine is still for sale, Yearley said. The asking price is $20 million, according to StreetEasy.com.
“In terms of how are various markets are doing, New York City urban is still on top of the list,” Yearley said during the earnings call. “Both Northern and Southern California are right behind.”
Toll Brothers has 12 New York City-area projects in the pipeline and is exploring expanding its high-rise developments to Boston, San Francisco and Miami, Yearley said.
Sales of previously owned homes jumped 6.5 percent last month to the fastest pace since November 2009, the National Association of Realtors reported today. Purchases climbed to a 5.39 million annual rate, more than the median economist forecast of 5.15 million.
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