The nation's largest luxury home builder sees momentum on its side, noting that contract signings have risen 16 percent in the last six weeks. Fred Katayama reports.
The housing recovery has been slow and uneven, but demand is strong among the wealthy. Profit at the top builder of luxury homes, Toll Brothers, shot up 39 percent in the latest quarter, and analysts say its condos concentrated in New York City drove volumes higher. It didn't nail Wall Street's profit forecast, but its revenue grew in double digits and beat estimates, as Toll was able to charge much higher prices for its homes. Its profitability would have been higher were it not for an increase in warranty and litigation reserves to fix the plaster on older homes. Toll says it has momentum on its side, noting that contract signings are up 16 percent in the last six weeks. It says the improvement in demand began in August, and if that trend continues, Toll expects to deliver on the higher end of its forecast range of 5,000 to 6,000 homes this fiscal year. Toll's shares, which have been underperforming its peers, are down nearly 6 percent this year. But that could change. Evercore ISI analyst Stephen East said, "Though this equity has been a laggard year-to-date with the exception of the past month, we believe the tide is turning and this release is strong enough to keep the tide rolling."