Toll Brothers' Good News Moves Homebuilders

HORSHAM, PA. (TheStreet) -- Luxury homebuilder Toll Brothers(TOL Quote) announced that its new contracts are up 42%, and that it expects fourth-quarter revenue will top Wall Street's expectations.

From preliminary fourth-quarter results, the company said it predicts revenue of $486.6 million. Granted, that is significantly lower than the $691.1 million from last year, but it is also $100 million more than analysts forecast.

The news sent shares spiking 14.3% to $21.02 in morning trading.

The contract cancellation rate was 6.9%, the lowest since the fourth quarter of fiscal 2005.

Buyers signed 765 contracts for homes valued at $430.8 million during the quarter.

Sell Toll!: Against the Grain

The company expects the extension of the tax credit for homebuyers will help sales, but still warned that the housing recovery will be slow and choppy, despite some positive data in the sector.