Toll Brothers shares climbed after the luxury homebuilder posted fiscal third-quarter results that topped Wall Street estimates on both the top and bottom lines, even as profit and deliveries fell from a year earlier in what the company’s new chief executive called “a challenging market.”
The Horsham, Pennsylvania-based builder reported diluted earnings per share of $2.97 on home sales revenue of $2.65 billion for the quarter ended July 31, according to Toll Brothers’ earnings release published on its investor relations site and distributed via GlobeNewswire. Analysts had expected EPS of $2.93 on revenue of roughly $2.62 billion, according to consensus estimates cited ahead of the report. Total revenue, including land sales and other income, came to about $2.66 billion.
Net income was $280.1 million, down from $369.6 million in the third quarter of fiscal 2025, and diluted EPS declined from $3.73 a year earlier. Home deliveries fell to 2,662 units from 2,959, and the home-sales gross margin narrowed to 23.9% from 25.6%, with adjusted gross margin slipping to 25.6% from 27.5%, the company disclosed in the filing, which was also furnished to the Securities and Exchange Commission as an exhibit to an 8-K filing.
Demand held up better than deliveries. Net signed contracts rose to $2.52 billion, or 2,508 homes, from $2.41 billion and 2,388 homes a year ago, and the average price of homes delivered increased to $996,400 from $973,600. Backlog stood at $6.24 billion across 5,312 homes at quarter’s end, down from $6.38 billion and 5,492 homes in the year-ago period, the release said.
“Toll Brothers delivered solid third quarter results in a challenging market,” said Karl K. Mistry, who succeeded longtime chief executive Douglas Yearley in the role this spring, in the earnings release. Mistry pointed to the builder’s ability to land ahead of its own guidance while preserving “healthy profitability and returns” as evidence the luxury-focused strategy is holding up against affordability headwinds pressuring the broader new-home market.
Toll Brothers reaffirmed its full-year guidance, still calling for roughly $10.5 billion in home sales revenue, 10,500 to 10,600 deliveries, an adjusted gross margin of 26.1%, an average delivered price of $995,000 to $1 million, and 480 to 490 selling communities, according to the release. Shares of Toll Brothers (NYSE: TOL) rose in the session following the report as investors weighed the estimate beat and reaffirmed outlook against the year-over-year declines in profit and volume.
The results land amid a broader homebuilding sector still grappling with elevated mortgage rates and buyer affordability strain. Rival PulteGroup likewise beat estimates on its own double-digit revenue decline last month, with its chief executive describing conditions as “pretty good” even as closings and average prices fell. The pattern β builders clearing lowered bars while absolute volumes shrink β has become a recurring theme this earnings season, and has also fueled consolidation, including Berkshire Hathaway’s $8.5 billion acquisition of Taylor Morrison earlier this year. Separately, mortgage-performance data has shown some easing in borrower stress, with FHA loan defaults posting an annual decline, according to ICE Mortgage Technology.
What it means: The verified facts are Toll Brothers’ reported figures and reaffirmed guidance, both sourced directly from the company’s earnings release and SEC filing: an EPS and revenue beat against consensus estimates, a year-over-year decline in net income and deliveries, a narrower gross margin, and higher backlog pricing despite fewer backlog units. The characterization of the housing market as “tough” or “challenging” is not analyst spin β it is language Toll Brothers’ own CEO used to describe the operating environment in the release. What remains an open question, and one investors will watch into next quarter, is whether builders’ pattern of beating steadily lowered estimates reflects genuine stabilization in luxury housing demand or simply more conservative Wall Street forecasting following two years of rate-driven volume declines. Toll Brothers did not provide new commentary in the release about mortgage-rate assumptions underlying its guidance, and the company’s next scheduled update will come with fourth-quarter results.
