New homes under construction in Edmonton earlier this year.Ian Jackson
Toll Brothers Inc., the largest luxury home builder in the United States, reported its highest revenue since the recession of 2008, underlining the recovery in the housing market and sending its shares to a five-year high.
The company, which targets wealthy customers who typically make at least $100,000 a year and have spotless credit records, reported a sharp jump in orders and forecast higher revenue for the full year.
"We are enjoying the most sustained demand we have experienced in over five years," Toll CEO Douglas Yearley said in a statement. "The housing recovery is being driven by pent-up demand, very low interest rates and attractively priced homes."
The U.S. housing market, which fell into a deep rut six years ago prompting a recession in the economy, has been recovering this year. Home sales have risen, helped by higher rental rates and low inventory.
U.S. home resales rose in July as low interest rates and a modest improvement in the labour market helped home buying conditions, the National Association of Realtors said on Wednesday.
Home builders such as D.R. Horton and PulteGroup have reported strong results.
"Housing is on the mend," Toll's executive chairman Robert Toll said.
The company said it was gaining market share as small and mid-sized private builders, its primary rivals, are constrained for capital.
Toll is the only publicly traded luxury home builder.
"The pace of our contract growth has far exceeded the national housing data as we are gaining market share," said Mr. Yearley.
Toll's net signed contracts rose 57 per cent to 1,119 units during May-July. Backlog jumped 59 per cent to $1.62-billion (U.S.).
Mr. Yearley said Toll's non-binding reservation deposits – an indication of future contracts – increased 59 per cent in the first three weeks of the fourth quarter.
The company forecast home-sale revenue of $1.71-billion to $1.84-billion for 2012. It raised the lower end of its full-year home delivery outlook range by 300 units to 3,000. It expects to deliver up to 3,200 units.
The forecast calls for at least 16 per cent growth in revenue and 15 per cent growth in deliveries.
For the third quarter, Toll's earnings rose to $61.6-million, or 36 cents per share, from $42.1-million, or 25 cents per share, a year earlier.
Revenue increased 41 per cent to $554.3-million.
The company's shares, which have gained 25 per cent of their value in the last three months, rose 6 per cent to $33.68 on Wednesday on the New York Stock Exchange.
Toll's results pushed up shares of other home builders. The Standard & Poor's home builder index was up 4 per cent.