(Bloomberg) -- Toll Brothers Inc. reported home orders that missed estimates as the pandemic shut down the economy and pushed buyers of pricey properties to the sidelines.

  • The builder, which focuses on luxury homes, said purchase contracts for the three months through April fell 22% from a year earlier to 1,886. The average analyst estimate was 2,250.

Key Insights

  • Toll took a big hit when much of the U.S. economy shut down. The company said its orders were down 64% from March 16 through the end of April. Its revenue is dependent on regions with some of the strictest stay-at-home rules, including the New York City and its suburbs, Pennsylvania, Seattle and California.
  • A surprise gain in U.S. new-home sales earlier this week, fueled by low mortgage rates, had stoked optimism that the housing market was stable even with job losses mounting. But Toll’s results indicate it could take a long time for luxury market to bounce back. Its customers paid an average of $823,000 for new homes in the second quarter.
  • While the housing market as a whole is showing better-than-expected resilience, spending on luxuries, including high-priced homes, typically trails off during an economic crisis.

Market Reaction

Toll’s shares had slipped 16% this year through the close of trading on Wednesday.

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