Luxury builder Toll Brothers Inc. reported a smaller quarterly loss and an increase in orders as low home prices induced its affluent target market to start buying again.
Orders rose 7 percent to 879 homes, the company said in a statement on Wednesday, and its shares rose more than 1 percent.
Most homebuilders are still struggling to compete against a glut of cheaper used housing, much of which resulted from the risky lending and speculation of the boom years. But wealthier customers with higher standards for a home's condition are less tempted by cut-rate foreclosures and short sales.
"We believe that some of our clients, after waiting so long, are starting to move off the fence and into the market," said Chief Executive Officer Doug Yearley.
Orders were particularly strong in New York City, New Jersey and Philadelphia, Credit Suisse analyst Dan Oppenheim wrote in a research note.
Sales of newly built U.S. single-family homes rose 7.3 percent in April, according to the Commerce Department. But analysts say the market is stuck near the bottom, and they did not change their views that the economy remains stagnant.
Data last week showed a steep drop in new home construction in April and a dip in sales of previously owned homes.
Toll also raised the low end of its home delivery outlook for fiscal 2011 to 2,300 from 2,200, while keeping the high end at 2,800.
The company said its loss had narrowed to $20.8 million, or 12 cents a share, in the second quarter ended on April 30 from $40.4 million, or 24 cents a share, a year earlier.
Excluding write-downs of land and joint ventures, pretax income was $1 million, compared with a loss of $9.5 million.
Revenue rose nearly 3 percent to $319.7 million.
Toll shares were up 1.2 percent at $20.52 in premarket trading.
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