Robert Toll is chairman and CEO of Horsham, Pa.-based Toll Brothers Inc., a Fortune 500 company, and the 14th largest builder in the country. The company, founded in 1967, develops luxury residential communities in 20 states. Toll was named one of Barron's Top 30 CEOs worldwide in 2005, and annointed “undisputed king of high-end housing.” Toll and his wife reside in Bucks County, Pa., and Big Builder spoke with him in March.

BB: Your first quarter seemed classic ‘good news, bad news'—net income up 49 percent over a year earlier, but a drop of 21 percent in contracts—and there was talk of tough quarterly comparisons with last year going forward. How tough?

RT: We are satisfied with sales even though they were off by 21 percent and may be off even more in the next quarter. The market is still pretty good in almost all of our markets. It is just that we are back to ‘03 and '02 in terms of demand level.

BB: Do you believe that a drop in new home business will mean a return to more sustainable sales levels?

RT: I don't subscribe to that. I believe when you have a burnoff of extra inventory that's coming back from the speculative investor in very hot markets, and when it's obvious you can no longer write about a home building market dropping—when that becomes obvious to the public—you are going to see a faster run-up in prices than anyone expects. The demographics have not changed.

BB: Let's talk about your company's large inventory of lots.

RT: The hardest thing in the business is to secure entitled land, and we've got it and I think our future is fairly well assured because of it.

BB: So what do you think are the adjectives we'll be using next January to describe this ‘06 housing market?

RT: A temporary lull in a permanent squeeze on consumers looking for new housing. We'll look back and think very differently about it than we do now.

BB: I am told you're an avid sailor, an offshore racer and a pretty good skier. Sounds like relaxation with an edge of competition.