Toll Brothers' signed luxury home contracts hit a new record during the third quarter, signaling a strong rebound in demand despite the coronavirus pandemic.
“Our third-quarter net signed contracts were our highest third quarter ever in both units and dollars, and our contracts per community, at 8.5, were the highest third quarter in fifteen years," Toll Brothers chairman and CEO Douglas C. Yearley, Jr. said in the company's earnings release on Tuesday. "This strength has continued into August. We attribute the surge in demand to a number of factors, including historically low interest rates, a continued undersupply of homes, and consumers focused more than ever on the importance of home."
The company's net signed contract homes surged 26% to 2,833 units compared to 2,241 units the previous year while contract value rose 18% to $2.21 billion compared to $1.87 billion.
Toll Brothers reported net income of $114.8 million, or 90 cents per share, compared to 146.3 million, or $1.00 per share the previous year. Meanwhile, home sale revenues fell 7% to $1.63 billion compared to $1.76 billion the previous year while deliveries increased slightly to 2,022 units compared to 1,994 units in the previous year.
The company noted that the backlog in homes for the third quarter was 7,239 units at a value of $6.09 billion compared to 6,839 units at a value of $5.84 billion in 2019. The average price of homes in backlog was $840,600, compared to $854,500 the previous year.
Toll Brother's adjusted home sales gross margin was 21.9% compared to 23.1% last year.
Looking ahead, the company expects fourth-quarter deliveries between 2,400 and 2,550 homes with an average price of between $815,000 and $835,000 and an adjusted gross margin of approximately 21.5%.
The rebound in luxury homes comes the same day as the Commerce Department's report that overall new home sales rose 13.9% to a seasonally adjusted annual rate of 901,000 units last month, the highest level since December 2006.
Toll Brothers stock closed at $46.05 per share at the end of Tuesday's trading session and is currently up more than 2 percent in after-hours trading.