(Reuters) - Toll Brothers Inc’s (TOL.N) quarterly revenue jumped nearly 31 percent as the company sold more luxury homes at higher prices, underscoring a steady growth in the U.S. housing market.
New U.S. single-family home sales surged to an over eight-year high in April and prices hit a record high, offering further evidence of a pickup in economic growth, data showed on Tuesday.
Shares of Toll Brothers, which mostly builds high-end single-family homes, rose as much as 8.9 percent to $29.51. The strong home sales data also boosted shares of other homebuilders Lennar Corp (LEN.N), D.R. Horton Inc (DHI.N) and PulteGroup Inc (PHM.N).
Toll Brothers’ orders increased 3.2 percent to 1,993 homes in the second quarter. The period falls in the spring selling season, an important time for homebuilders.
“...the drivers are in place to sustain the current housing market’s slow but steady growth. Interest rates remain low, the job picture continues to improve,” Executive Chairman Robert Toll said.
Chief Executive Douglas Yearley said Toll Brothers was not seeing any weakness in demand for high-end homes, but an exception was New York City, where prices could top $3 million.
Lennar, D.R. Horton and PulteGroup have also reported strong results, mainly due to higher demand from first-time buyers.
Toll Brothers said it expected to sell 5,800-6,300 homes in the year ending Oct. 31. The company had earlier forecast home sales of 5,700-6,400.
It also raised the lower end of its average selling price forecast for the year to $820,000 from $810,000, maintaining the higher end at $850,000.
In the quarter ended April 30, Toll Brothers sold 1,304 homes at an average price of $855,500. This compared to 1,195 homes at $713,500, a year earlier.
The company’s home sales in California soared 80 percent, while sales in the West, which includes Arizona, Colorado, Nevada and Washington, increased by a quarter.
Orders in California, however, fell 25.3 percent as some of the company’s projects are nearing sellout, leaving limited inventory available for sale.
Its net income jumped 31 percent to $89.1 million, or 51 cents per share, beating the average analyst estimate of 46 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose for the third straight quarter to $1.12 billion, topping the average estimate of $1.04 billion.
Gabelli & Co analyst Alvaro Lacayo said the company’s gross margin expansion bucked the trend in the industry, which had been hit by rising land and labor costs.
Reporting by Arunima Banerjee and Ankit Ajmera in Bengaluru; Editing by Biju Dwarakanath, Sunil Nair and Kirti Pandey