(Bloomberg) -- Toll Brothers Inc. reported better-than-expected order growth as wealthy homebuyers upgraded to bigger properties in the suburbs.
- Purchase contracts for the three months through January jumped 59% from a year earlier to 2,874, the builder said in a statement Tuesday. The average estimate of analysts surveyed by Bloomberg was 2,370.
- Toll benefited from a tight supply of new and existing homes for sale, low mortgage rates and a “heightened appreciation for homeownership,” Chief Executive Officer Douglas Yearley said in the statement. “These market conditions, which we expect to continue for the foreseeable future, clearly play to our strengths.”
- Toll’s affluent customers, who are less likely to have suffered from pandemic-related job cuts, are able to afford more-expensive houses as borrowing costs near record lows increase their purchasing power.
- The company also has expanded its reach with a growing inventory of “affordable luxury” offerings aimed at younger buyers.
- Toll is well-positioned to capitalize on surging demand because of its land pipeline and expectation for solid growth in community counts over the next two years, according to Bloomberg Intelligence analyst Drew Reading.
- In the current quarter, Toll expects to deliver 2,175 homes with an average price of $785,000 to $805,000. The company said the results will be hurt by the weak sales environment from mid-March through May.
- For 2021, Toll sees deliveries of 10,000 to 10,400 homes and a gross margin of 23.3%.
- Toll’s shares rose as much as 4% in late trading in New York. They had gained 25% this year through Tuesday’s close, one of the best performances in a S&P index of homebuilder stocks, which climbed 13%.
©2021 Bloomberg L.P.