Toll Brothers Inc., a leading builder of luxury homes, said Friday its signed contracts fell 29 percent in its second fiscal quarter, and cut its full-year home deliveries forecast.
For the three months ended April 30, Toll projected preliminary contracts of roughly $1.56 billion, down from $2.2 billion in the year-ago period. Backlog for the quarter rose 3 percent to roughly $6.07 billion from $5.87 billion a year ago.
Toll Brothers also forecast it would deliver between 9,000 and 9,700 homes in fiscal 2006, a reduction of 200 homes from its previous outlook.
The company attributed the drop in contracts and deliveries to a greater supply of homes resulting from a drop in speculative buyers, and more cancellations from non-speculative buyers. The cancellation rate over the quarter was 8.5 percent, higher than Toll's historic average of about 7 percent.
"Speculative buyers are no longer fueling demand; instead they're putting the homes they've recently acquired back on the market or are canceling contracts in mid-construction," Chief Executive Robert Toll said. Much of the excess homes for sale are being aggressively discounted, he added.
Second-quarter revenue is expected to increase 18 percent to $1.44 billion from $1.23 billion in the year-ago period. Revenue from land sales totaled roughly $2.1 million for the quarter, versus $9.8 million in the prior-year period.