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Toll Brothers, Inc. (TOL) reported a 5% increase in home deliveries for Q3 of fiscal 2025, compared to the previous year, with revenues growing by 6%. The average selling price for delivered homes reached $974,000. However, the company experienced a 4% year-over-year decline in net signed contracts and a significant 19% drop in backlog units, indicating pressure from elevated mortgage rates.
Despite profitability challenges, Toll Brothers maintains a strong backlog average price of $1.161 million, up from $1.044 million a year earlier. Gross margin contracted to 27.5%, while SG&A expenses improved to 8.8% of revenues. The company’s EPS target for fiscal 2025 is set at $13.75, lower than the $13.82 reported in fiscal 2024.
As major competitors like Lennar Corporation (LEN) and D.R. Horton, Inc. (DHI) also grapples with declining sales volumes, Lennar’s gross margins fell to 18% from 22.5% over the past year, and D.R. Horton anticipates home closings to be reduced to between 85,000 and 85,500 in fiscal 2025, down from 89,690 in fiscal 2024.
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