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HORSHAM — Toll Brothers Inc. said Wednesday it trimmed its losses in the second fiscal quarter and is seeing a pickup in the number of homebuyers who are ready to put down deposits.
New home buyers are responding to falling prices and low interest rates, which have made homes more affordable than they have been in years, CEO Robert Toll said in a statement.
Since late March, Toll has seen an increase in homebuyer deposits during nine of the past 11 weeks, compared to weekly figures from fiscal 2008.
Throughout the industry, major homebuilders say they are seeing pockets of strength and even some signs that prices are stabilizing. The real estate recession, now in its third year, may be ending, but the pace of any recovery will depend on the economy.
"Although cancellations appear to be leveling off, we believe that concerns about job security and the economy continue" to make potential homebuyers nervous, Toll said.
The Horsham, Pa.-based builder lost $83.2 million, or 52 cents a share, on sales of $398.3 million in the fiscal quarter ended April 30. The results were in line with analysts' estimates and slightly better than the loss of $93.7 million, or 59 cents a share, on $818 million in sales in the year-ago period.
Toll took $119.6 million in write-downs during the quarter to reduce the value of land and unsold homes on its books to reflect current prices. The builder took $288.1 million in write-downs a year earlier.
The builder saw completed sales decline 47 percent versus a year ago. New orders fell 27 percent.
The average selling price of a Toll home fell 7 percent to $615,000.
Still, the rate at which the builder is getting customers who give deposits to complete the deal remains low, Barclays Capital analyst Megan McGrath observed in a research note Wednesday.
Toll didn't give earnings guidance, and pared back its forecast for the year. The company now expects to sell between 2,200 and 2,800 homes for between $590,000 and $620,000.
Meanwhile, Hovnanian Enterprises Inc.'s CEO said Wednesday recent trends in sales and home prices suggest the housing market is improving despite the uncertainty over the U.S. economy.
During a conference call with Wall Street analysts, Ara Hovnanian said homebuyer tax credits are stoking sales and noted home price declines have slowed in some hard-hit markets.
But the builder said there's still some pain ahead for the housing market if foreclosures continue to climb.
The Red Bank, N.J.-based company reported late Tuesday it cut its second-quarter loss to $118.6 million from a loss of $340.7 million in the prior year period.
Hovnanian shares tumbled 41 cents, or 13.6 percent, to $2.61 in afternoon trading.
