U.S. homebuilder Toll Brothers Inc. reported better-than-expected order growth as the pandemic spurred affluent buyers to upgrade to larger spaces.
Purchase contracts for the three months through April surged 85% from a year earlier to 3,487, the builder said in a statement after the close of trading Tuesday. The average estimate of analysts surveyed by Bloomberg was 2,960. The number of orders was an all-time quarterly record for Toll, the country’s largest luxury builder. The company exceeded its forecasts on nearly every metric, Chief Executive Officer Douglas Yearley said in the statement.
Toll is well-positioned to take advantage of the high-end housing boom. The rich are emerging from the pandemic with bulging savings accounts and stock portfolios and with jobs intact. Toll is welcoming them to sales offices.
Ferocious buyer demand fueled by low mortgage rates is allowing Toll and its competitors to raise prices quickly even as construction costs soar. Builders have been catching up with the existing-home market, where prices until recently have been rising at a much faster pace.
It was an easy comparison from a year earlier, when Covid-19 lockdowns froze home purchases across the country. Earlier Tuesday, KB Home reported preliminary results that showed its quarter-to-date orders for the three months through May jumped 155% from the same period in 2020.
Toll Brothers shares were up slightly in late trading. They have gained 43% this year through Tuesday’s close, compared with a 29% increase for an S&P index of homebuilder stocks. Toll said it expects deliveries of 2,675 homes in the current quarter and average prices from $820,000 to $840,000. The adjusted gross margin will be 24.8%.
