Despite challenging market conditions, Toll Brothers delivered strong results in the company’s fiscal third quarter, growing sales revenue and home deliveries on a year-over-year basis.
The home builder noted a positive driver of results during the period was the resilience of its luxury business and its more affluent customer base. While other peers are more strongly feeling the impact of affordability challenges, Toll Brothers’ average sales price for deliveries—$974,000—has contributed to more market resiliency. The builder’s cancellation rate remained low in the period, suggesting buyers are more comfortable moving forward with purchases, while its share of all-cash buyers remained elevated at 26%.
Toll Brothers noted incentives also ticked up in the fiscal third quarter, ended July 31, due to a softer market. The average incentive in new contracts was approximately 8% in the period, up from 7% in Toll Brothers’ second quarter.
Third Quarter By the Numbers
- Third quarter profit was $369.6 million, or $3.73 per share, compared to net profit of $374.6 million, or $3.60 per share, during the third quarter of 2024. The builder’s third quarter earnings per share bested Wall Street projections for the period.
- Home sales revenues were $2.88 billion, up 6% on a year-over-year basis, while home deliveries increased 5% to 2,959.
- Net home contracts decreased 4% to 2,388 while net contract value was flat at $2.41 billion.
- Toll Brothers ended the quarter with 76,800 lots owned or controlled, up from 72,700 lots a year ago. Approximately 43% of its lots were owned and the builder allocated $432.7 million on land acquisition in the third quarter.
- The company ended the period with 420 active selling communities and 5,492 homes in backlog.
What They’re Saying
“In this environment, we continue to actively manage our spec starts and inventory levels on a community-by-community basis to match local market conditions. In some markets, especially in the North region, where inventory remains low and demand is strongest, we have increased spec production. Overall, as local markets evolve in the coming months, we will be making decisions as to how many spec homes to start as we plan ahead for fiscal 2026. As we see market improvement, we have the ability to quickly ramp up our spec production.” — Douglas Yearley, chairman and CEO
“While affordability pressures and uncertain economic conditions persist, we are pleased with the resilience of our luxury business and more affluent customer base. In this environment, we continue to focus on strategically balancing price and pace in order to maximize profitability and returns.” — Yearley
