Luxury homebuilder Toll Brothers (TOL) posted third-quarter net income of $66.7 million, or $0.36 per share diluted, down compared to net income of $97.7 million, or $0.53 per share diluted, for the same quarter a year ago.
Revenue did not fare too much better, coming in at $1.03 billion in the third-quarter, compared to 2014’s third-quarter total revenues of $1.06 billion.
This missed EPS expectations of by $0.13, while revenue expectations missed by $20 million.
Additionally, the builder’s third-quarter net contracts of $1.23 billion and 1,479 units rose by 30% in dollars and 12% in units, compared to 2014's third-quarter net contracts of $949.1 million and 1,324 units.
The average price of net signed contracts was $834,000, the highest quarterly average in the company's history, compared to $717,000 in 2014's third quarter, driven by an increase in California contracts.
"This housing recovery appears to be built on a very solid foundation. We believe that the slow but steady acceleration we and the industry are experiencing bodes well for the long-term health of the housing market based on increasing household formations, pent-up demand and current industry-wide production that is still well below historic norms,” said Douglas Yearley, Toll Brothers' CEO.
“With our great land positions, well-established brand, broad product and geographic diversification and solid financial footing, we are very optimistic about the future. We believe we have significant room for growth and increased profitability in FY 2016 and beyond," Yearley continued.
Despite the rough quarter, the homebuilder is still hopeful for the future.
"We are encouraged by the report last week of improvement in single-family housing starts to the best pace since 2007. Although seasonally adjusted total starts rose to an annualized 1.2 million pace, that leaves lots of room before we are at historical norms, dating back over forty years, of 1.5 to 1.6 million starts,” said Robert Toll, executive chairman.
And the homebuilder isn’t the only one predicting a positive future for homebuilders.
Lindsey Piegza, chief economist for Stifel, said in regard to housing, “With an ample amount of homes already sold and for sale under construction, builders are working to meet relatively robust demand and furthermore appear to be anticipating a continued rise in American’s appetite for newly constructed units.”