Toll Brothers Inc., the largest U.S. luxury homebuilder, reported a 24 percent rise in quarterly revenue, as customers bought homes at higher prices, undeterred by rising mortgage rates.
Toll typically targets affluent customers with spotless credit records and, so, has not been hit as much as some of its peers have been by higher interest rates, which hit a two-year high in July.
Order growth at Toll slowed to 26 percent in the third quarter ended July 31 from 36 percent in the second and 49 percent in the first quarter.
However, the rate was higher than that reported by D.R. Horton Inc. and PulteGroup Inc. in the latest quarter.
Horsham, Pennsylvania-based Toll said average selling price of its homes rose 13 percent to $651,000 in the quarter.
"We believe the recovery is real and we are in the early stages of the rebound," Toll Chief Executive Douglas Yearley said in a statement on Wednesday.
The company, which builds houses in 19 states across the U.S., is also one of the few builders that does not need to ramp up buying land as it already has a land bank in urban areas, where it can consistently raise prices.
Toll said it ended the third quarter with 47,200 lots developed for construction, up from 39,200 a year earlier.
The company, which had 225 communities at the end of the quarter, expects this count to grow by 10-15 percent by its fiscal year ending October 2014.
The No.3 builder in the U.S., Lennar Corp. is the other builder whose large land assets have allowed it to continue a strong sales pace.
Until July, Toll enjoyed being the only listed luxury U.S. homebuilder, which gave it access to easy financing to recover from the financial crisis.
Toll's smaller peer WCI Communities Inc. went public late last month, joining a string of builders tapping the stock market as they aim to meet the burgeoning demand for homes in the country.
WCI said its revenue rose 72 percent, with a 15 percent jump in orders in the second quarter ended June 30.
In the third quarter, Toll's backlog rose 56 percent to 4,001 units, with a value of $2.84 billion, up 75 percent.
Toll forecast revenue between $2.46 billion and $2.62 billion for full year 2013 with total home deliveries of 3,925 to 4,125 units.
Net income fell to $46.6 million, or 26 cents per share, from $61.6 million, or 36 cents per share, a year earlier. Revenue rose 24 percent to $689.2 million.
Shares of the company have fallen more than 20 percent after touching an 8-1/2-year high in May. They closed at $31.64 on the New York Stock Exchange on Tuesday.
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