UPDATE 2-Toll 4th-quarter revenue to top view; shares up

* Q4 expected revenue $486.6 mln; Wall St view $386.2 mln

* Q4 net contracts expected up 42 percent

* Sees slow, fitful improvement

* Shares up 5.4 percent

SEATTLE, Nov 10 (Reuters) - Luxury homebuilder Toll Brothers Inc (TOL.N) said on on Tuesday said it expected fourth quarter revenue to drop 30 percent, but blew past Wall Street's expectations by nearly $100 million, and the company's shares rose 5.4 percent in after-hours trading.

In a positive indication for the housing market, Toll Brothers also said preliminary results for the quarter ended Oct. 31 showed fourth-quarter net contracts rose 42 percent to 765 units, or 62 percent to $430.8 million.

The broader U.S. housing market has shown some signs of stabilization recently, such as the increase in the sales of existing homes.

The summer months saw the housing market, including both resale and new homes, get a boost from a $8,000 federal tax credit for first-time home buyers.

"We have definitely progressed from one year ago," Robert Toll, the company's chief executive officer said in a statement. "The shock to the financial system in mid-September 2008 that shut down the capital markets appears to be mostly behind us."