Toll Brothers (NYSE:TOL) saw its first-quarter, 2008 revenues decline 22% to $842 million as gross sales fell 38% to 904 homes. Its cancellation rate fell to 28.4% , down from 38.9% in the previous quarter and from 29.8% during the fiscal first quarter of 2007, and, as a result, the company reported net contracts of 647 units, worth $375.3 million, down 37% from 1,027 units in first quarter 2007 with a 50% drop in dollar value from $748.7 million. according to preliminary results for the quarter ended Jan. 31. released Wednesday morning.

Joel Rassman, Toll CFO, said in a statement that the company expects to take between $150 million and $300 million in write-downs for the quarter.

Horsham, Pa.-based Toll also reported that its average price per unit for gross signed contracts dropped 13.1% to $634,000, due to a change in the company's product mix to a higher percentage of multi-family attached communities. It said the average price of cancelled contracts was $770,000 per unit, which, together with the price decline of gross contracts, resulted in an average price for net contracts signed of $580,000 per unit, up from $557,000 in the fourth quarter of 2007.

Toll said it ended the quarter with approximately 57,000 lots owned and optioned, compared to approximately 91,200 at peak in the second-quarter of 2006. It had 315 selling communities at quarter's end, down from 325 the end of second quarter 2007 and said it expects to be selling from approximately 300 communities by fiscal-year-end 2008.

"The housing market remains very weak in most areas. Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel," said Robert I. Toll, chairman and CEO. "We ended our first quarter with approximately $950 million in cash and more than $1.2 billion available under our multi-bank credit facility, which matures in March of 2011. We believe we are well-positioned as opportunities arise from the current turmoil in our industry."

He added, "We did see, however, for the first time in recent memory, The New York Times suggests that now might be a good time to buy a home. Perhaps this signals the beginning of a change in public sentiment in recognition of significantly improved housing affordability, low mortgage rates and a supply imbalance making it a buyer's market."

Michael Rehaut, home building analyst at J.P. Morgan Securities, said in a research note that the Toll results were evidence that the recent rally in home-builder stocks was "premature as the housing market's trough is still far off. Moreover, the midpoint of TOL's estimated impairment range was only slightly below our estimate, and given our outlook for a continued challenging environment led by weak demand and further price cuts, we believe a material level of charges will continue for the next several quarters."

Toll Stock (NYSE:TOL) was trading down 2.4% at $21.34 at 10 a.m.