* New home sales fall 12.4 percent in July from June

(Updates shares, adds conference call comments, background,
graphic)

By Helen Chernikoff

NEW YORK (Reuters) - U.S. luxury homebuilder Toll
Brothers Inc beat Wall Street expectations and reported
its first quarterly profit in three years Wednesday, sending
its shares and those of other homebuilders higher.

While tax gains and lower writedowns on land values helped
its profit, revenue of $454.2 million beat expectations by 15
percent. Orders fell 16 percent, but analysts had forecast
declines of up to 30 percent.

The company also did a good job of holding down
administrative costs, said Morningstar analyst Mike Gaiden.

Toll reported net income of $27.3 million, or 16 cents per
share, for the fiscal third quarter ended July 31, compared
with a loss of $472.3 million, or $2.93 per share, a year
earlier.

Analysts were expecting a loss of 14 cents a share,
according to Thomson Reuters I/B/E/S.

The company sounded cautious, despite the results.

"Recent economic and political news continues to dampen our
customers' confidence," said Executive Chairman Robert Toll.

On Wednesday the Commerce Department reported that in July,
sales of new homes fell 12.4 percent from June to their slowest
pace on record. Prices hit their lowest level in more than
6-1/2 years.

"Demand remains pretty abysmal," Gaiden said.

The National Association of Realtors on Tuesday reported
that sales of used homes fell 27.2 percent in July from June to
their slowest pace in 15 years.

Toll transcended the weaker housing market primarily
because it took $12.5 million in writedowns on land that lost
value, far less than analysts had anticipated and down from
$115 million a year earlier, Gaiden said.

"When things normalize, this company is in a very good
position to deliver sound profitability," he added.

Impairments fell because Toll was smart enough to identify
and mark down its weakest assets early, Gaiden said.

Toll Brothers is known among homebuilders for its eagerness
to buy land, unlike other builders who minimize that risk by
purchasing options to buy the land instead. The housing bust
has only whetted the company's appetite for lots.

In July, the company said it was starting an investment
fund, called Gibraltar Capital, to buy real estate assets such
as loan portfolios and land for development.

"We are opportunistically looking to take advantage of the
unfortunate disarray that exists in the market," said Executive
Chairman Bob Toll during a conference call with analysts.

The company also said it is seeing an "excellent" flow of
possible land deals, and its urban apartment tower segment, 12
percent of its business, has been "spectacular" in recent
months.

Toll shares, which have fallen about 32 percent in the last
four months, touched a 52-week low of $15.57 Tuesday but
were up 5.7 percent at $17.11 in afternoon trading
Wednesday.

Shares of D.R. Horton Inc , the largest U.S.
homebuilder, were up 4.8 percent at $10.54 while the Dow Jones
U.S. Home Construction Index was up 3.7 percent.
(Reporting by Helen Chernikoff; additional reporting by
Archana Shankar in Bangalore; editing by John Wallace, Robert
MacMillan and Leslie Gevirtz)