Toll Brothers missed analyst projections for profit in its fiscal first quarter, ended Jan. 31. The home builder generated profit of $177.7 million, or $1.75 per share, in the first quarter of 2025, down from $239.6 million, or $2.25 per share, in the fiscal first quarter of 2024. The profits per share figure was approximately $0.30 per share lower than Wall Street projections.
During the home builder’s earnings call, CEO Douglas Yearley reiterated that Toll Brothers’ home building operations met expectations in the quarter and the under performance was due to other factors in the period.
“While our net income and earnings per share came in below expectations, this was due primarily to impairments and a delay in the sale of a stabilized apartment property in one of our joint ventures,” Yearley said. “Our core home building operations met expectations in the quarter.”
In the period, Toll Brothers delivered 1,991 homes at an average price of approximately $925,000 and generated home sales revenues of $1.84 billion. Deliveries represented a 3% year-over-year increase from the first quarter of 2024, while home sales revenue was down 5% compared to the prior-year period.
The builder contracted 2,307 homes in the period, up 13% from the prior-year period, and generated a net signed contract value of $2.31 billion, 12% higher than the first quarter of 2024.
“While demand was solid in our first quarter, we have seen mixed results so far this spring selling season. Although demand has remained healthy in many of our markets and particularly at the higher end, affordability constraints and growing inventories in certain markets are pressuring sales—especially at the lower end,” Yearley said. “We continue to strategically manage our pricing, incentives, and spec starts on a community-by-community basis to best match local selling conditions and appropriately balance pace and price.”
Yearley said demand is supported by the relative affluence of the Toll Brothers buyer. Over 70% of the builder’s business comprises luxury move-up and empty nester buyers and, consistent with recent quarters, approximately 26% of first quarter purchases were made with all cash. In part due to the financial strength of prospective buyers, the home builder maintained a contract cancellation rate of 2.4%.
In the period, 55% of sales and 52% of deliveries were spec homes and Toll Brothers ended the quarter with 3,200 spec homes in inventory. While Yearley said spec activity will continue to be monitored on a community-by-community basis, the company expects to reduce spec starts in the near term overall.
At the end of the quarter, Toll Brothers controlled or owned approximately 77,700 lots, of which 56% were controlled. Yearley said Toll Brothers is progressing toward its long-term goal of 60% controlled lots and 40% owned lots.
“We believe the long-term outlook for the new home market remains very positive and continues to be supported by strong fundamentals,” Yearley said. “These include favorable demographics, the structural undersupply of millions of homes in the U.S., the aging stock of existing homes, and the accumulated wealth built up from years of stock market and home price appreciation.”
