The housing market keeps unraveling. And a recovery this year looks increasingly dim, say experts.

But Toll Brothers (TOL) has carved out a profitable niche: luxury homes. It builds high-end homes in the bustling northeastern corridor that runs from Washington, D.C., to Boston. Resilient markets protect the company from having to slash home prices.

The result: more pricing power than its rivals. Homebuilders such as PulteGroup (PHM) and KB Home (KBH) are awash in red ink as housing prices plunge.

Yet Toll Brothers squeaked out a modest profit of $3.4 million in the first quarter of fiscal 2011, compared to a loss of $40.8 million in 2010. Sales rose 3 percent, beating analysts’ estimates.

So is Toll Brothers out of the woods? Not yet. Home prices are still slipping this year. Right now, Toll Brothers’ average home price is $586,000. But the company expects that figure to decline to between $565,000 and $540,000 the rest of the year.

As the company buys up land — 1,935 lots for $132 million in the first quarter — margins could get squeezed even further.

Looking for a bottom

As a result, few are bullish on Toll Brothers, at least this year. Of 20 analysts who follow the company cited by Reuters, most issued hold ratings. Only three thought the homebuilder was a buy.

The lone sell rating was given by Stifel Nicolaus, which recently downgraded Toll Brothers. The reason: Toll Brothers is overvalued at $20. The fair market price is closer to $17, reasons the firm. Stifel Nicolaus analysts added that there was more “upside potential in several peers.”