Luxury builder Toll Brothers Inc. reported stronger-than-expected quarterly orders and raised its sales expectations as tight supplies of existing homes fueled demand for new ones.
For the three months through July, purchase contracts rose 77% from a year earlier to 2,245, the company said in a statement Tuesday. The average estimate of 14 analysts in a Bloomberg survey was 2,064.
Toll now expects to deliver 9,500 to 9,600 homes for its full fiscal year, up from its previous forecast of 8,900 to 9,500.Toll and other US builders have been magnets for shoppers unhappy with what they can find on the existing-home market. Generous incentives, such as mortgage rate buy-downs, have made purchases more affordable.
Toll’s relatively wealthy customers are less likely to be held back by higher borrowing costs. In many cases, they’re able to plow profits from the sale of a previous house into the purchase of a new one. Boosting production of “spec homes” — started without a specific buyer in mind — has contributed to the company’s success, Chief Executive Officer Douglas Yearley said. The added supply has helped the company meet demand for deals that can close quickly.Market Reaction
Toll’s shares rose in late trading. They had gained 52% this year through Tuesday’s close, compared with a 42% increase for an S&P index of US homebuilders.Lean inventory and higher mortgage rates drove down sales of previously owned homes in July.
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