The McMansion is not dead. That was a main take-away during Toll Brothers' fiscal first quarter of 2011 earnings call Wednesday afternoon.

The Horsham, Pa.-based luxury builder not only beat Wall Street estimates with its reported earnings of $3.4 million, or $0.02 a share, but it also impressed analysts with its 4% year-over-year earnings growth. Few public builders could claim one of those positive performance metrics, much less both. KB Home, Lennar Corp., and NVR were able to post profits for their most recent quarters, but only Meritage Homes and M/I Homes were able to post order growth.

Executives said much of the growth was driven by strength in the Washington, D.C., to Boston corridor, as well as the company's Texas markets. Consequently, nearly three-quarters of the company's backlog came from the New York/New Jersey metro, Texas, and Washington, D.C., metro markets.

Moreover, Toll executives said they remained "cautiously optimistic" about the spring selling season. In the few weeks since the Super Bowl, the unofficial start of the spring selling season, executives said gross deposits are up 15%, or 9% on a same store basis.

Although the spring selling season appeared to be off to a solid start, running roughly in line with activity last year when the industry had the federal home buyer tax credit as a tailwind, executives were reserved in their outlook despite the signs of growing demand. Management estimated the company was on track to deliver between 2,200 and 2,800 homes in 2011 out of between 215 and 225 actively selling communities by the end of the year, up from 200 at the close of 2010.

When asked if the company would consider raising prices given the strong signs of organic demand, company executives responded with a definitive no. They pointed to some markets where some pricing power may exist--Boston, New York/New Jersey metro, Texas, and Washington, D.C., metro--but the degree was limited, they said.

"It's also limited by our own fear," said company chairman Bob Toll, explaining the company had pushed pricing around this time last year, only to be caught holding the bag, so to speak, after the tax credit expired. "We're being more cautious because we don't want to kill the goose."

However, several other factors have the potential to dampen the company's fledgling rebound. First, the company's niche in the move-up market leaves it vulnerable to contingency sales, which sometimes can wind up as cancellations when buyers have trouble selling their existing homes. However, Toll said the company isn't really dealing with much of a so-called "stuck factor."

"In markets that are behaving themselves, there's movement to buy irrespective of the problem of getting out of a home what you put into it," he said.

The other factor is the legislative and regulatory push to reduce conforming loan limits as part of an overhaul of Fannie Mae, Freddie Mac, and FHA. Executives noted, if the high end of conforming loan limits were reduced from $729,000 in select markets to $625,000, it would affect 3.8% of the company's sales in terms of units. However, executives also pointed out that 18% of the company's buyers are cash buyers versus the 72% of its buyers who obtain financing through conventional loans, and the average Toll home buyer who does need financing puts down 30%.

But for the moment, management was focused on making the most out of whatever spring selling season there may end up being. The company is running a 10-day national promotion through Feb. 27 to drive traffic and sales. The national sales event is supported by Toll vendors, who have provided special pricing on options for the event, executives said. This is the same promotion the company ran a year ago.