Toll Brothers’ differentiated business model, serving a more affluent buyer in the luxury home segment, benefited results in the fiscal fourth quarter and the full fiscal year. The builder increased deliveries and home sales revenue in both the fourth quarter and the full fiscal year, in large part due to the financial strength of its typical buyers.
“Our results over the past few years, and especially this last year, have proven our business model and strategy can produce strong returns in good markets and bad,” Douglas Yearley, chairman and CEO, said during the builder’s earnings call. “To illustrate this point, we started fiscal 2025 with fewer than 6,000 homes and $6.5 billion in backlog, down 9% in units and 7% in dollars from the prior year. At the end of fiscal 2025, we delivered a record 11,292 homes and $10.8 billion in home sales revenues, up 4% in units and 3% in dollars despite a soft market throughout the year.”
While many prospective buyers are sidelined due to affordability challenges, the average price point and product for Toll Brothers has made the company more resilient against such challenges. The builder’s average sales price in the fiscal year was $960,000 and 26% of buyers paid in all cash. Additionally, 70% of buyers were move-up or move-down buyers who were typically more wealthy, had greater financial flexibility, and had equity from their existing homes. The 30% of Toll Brothers buyers in the first-time buyer segment were typically older and more affluent and less stretched by affordability.
While the company offered an average incentive of approximately 8% of sales price, Yearley noted the take rate on mortgage rate buydowns was “very low.”
“Our buyers do not need a lower rate to qualify for a mortgage and they would rather spend incentive dollars upgrading their homes through our design studios,” Yearley said. “The average spend on design studio selections, structural options, and lot premiums in the fourth quarter was approximately $206,000 per home, or roughly 24% of base price.”
Spec homes accounted for approximately 54% of all deliveries in fiscal 2025 and Yearley projects a similar mix between specs and built-to-order homes will persist in 2026.
“Our fourth quarter and full year results demonstrate that our luxury business is differentiated, as we serve a more affluent customer who is less impacted by affordability pressures,” Yearley said. “These results also underscore the resilience of our business model, which includes a healthy balance of build-to-order and spec homes, a broad geographic footprint, the widest variety of home offerings and price points in the industry, and improved operating efficiency.”
Yearley said the company has a sufficient land pipeline to support between 8% to 10% community count growth in fiscal 2026.
By the Numbers
- Toll Brothers generated profit of $446.7 million, or $4.58 per share, in the fiscal fourth quarter, down marginally from profit of $475.4 million, or $4.63 per share, in the fourth quarter of 2024. For the full fiscal year, the builder generated profit of $1.35 billion, or $13.49 per share, down from $1.57 billion, or $15.01 per share, in fiscal 2024.
- The builder generated home sales revenue of $3.41 billion on 3,443 deliveries in the fourth quarter, up from revenue of $3.26 billion on 3,431 deliveries in the fourth quarter of 2024. In the full fiscal year 2025, home sales revenue increased to $10.84 billion from $10.56 billion while deliveries increased to 11,292 from 10,813.
- Fourth quarter net orders declined to 2,598 from 2,658. For the full fiscal year, net orders declined to 9,943 from 10,231.
- At the end of the fiscal year, Toll Brothers had 4,647 homes in backlog representing a value of $5.5 billion, down from 5,996 homes and a value of $6.5 billion at the end of fiscal 2024.
- The company ended the fiscal year with approximately 76,100 lots owned and optioned. Approximately 43% of the builder’s lots were owned.
