Luxury home builder Toll Brothers reported record third-quarter home sales and raised its outlook for the year as falling mortgage rates in the past few weeks signal solid demand into 2025.
The company reported quarterly revenue of $2.72 billion and earnings of $3.60 a share. Revenue was up nearly 2% from a year earlier, and Toll Brothers also reported better-than expected adjusted gross margin of 28.8%, and an 11% increase in net signed contracts.
Analysts tracked by FactSet expected revenue of $2.71 billion and earnings of $3.31 a share.
Moreover, Toll Brothers said it expects the positive results to continue, and raised its full-year guidance across all key home-building metrics. For fiscal year 2024 ending in October, it expects earnings of $14.50 to $14.75 a share, compared with the analysts’ consensus of $14.17 a share.
The company delivered 2,814 homes in the quarter, up 11% from one year ago, at an average price of $968,000.
Toll Brothers stock was up 0.7% in after-hours trading.
“With mortgage rates at their lowest point in a year and trending lower, favorable demographics, and continued imbalance in the supply and demand of homes for sale, we are optimistic that demand will remain solid through the end of fiscal 2024 and into 2025,” Chairman and CEO Douglas C. Yearley, Jr., said.
Adjusted gross margin significantly exceeded expectations because of a favorable mix and greater home-building efficiencies, and its selling, general, and administrative expenses margin of 9%, as a percentage of home sales revenues, beat guidance.
For the full fiscal year 2024, Toll Brothers expects to deliver 10,650 to 10,750 homes at an average price of $975,000, and report an adjusted home sales gross margin of 28.3%.
Yearley will host a conference call to discuss the company’s quarterly results and fourth-quarter outlook at 8:30 a.m. ET on Wednesday.
