Toll Brothers Swings to Loss

But the loss is not as severe as Wall Street had expected.
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Toll Brothers

(TOL) - Get Report

swung to a second-quarter loss that was narrower than analysts expected, but new orders for the homebuilder's luxury homes remained weak as Toll remains reluctant to cut prices across the board on its inventory.

In posting quarterly results Tuesday, the firm's CEO also called upon the U.S. Congress to create tax incentives for homebuyers in order to stimulate demand and ease the problems in the housing market.

Toll reported a loss of $93.7 million, or 59 cents a share, compared with a profit of $36.7 million, or 22 cents a share, a year earlier. Analysts expected a loss of 89 cents a share, according to Thomson Reuters.

"Demand continues to be weak in most markets as our clients worry about selling their existing homes or entering the market before prices stabilize," said CEO Robert Toll in a statement.

Toll shares rose 3.3% to $21.66 in recent trading Tuesday morning.

Excluding $288 million of land writedowns, Toll reported a profit of $81.3 million, or 49 cents a share.

Revenue fell 30% to $819 million. Net new contracts fell 44%, while the average sale price of the contracts fell 17% to $590,000.

Toll said it continues to offer incentives on a community-by-community basis, but it is not universally doing so, in contrast to other builders. This approach has resulted in slower sales, but Toll believes it has helped sustain the reputation of its communities.

Toll called on the U.S. government to offer tax incentives for homebuyers to help the housing market.

"We believe Congress should jump-start demand for new homes with an initiative that will bring buyers off the sidelines and into the market, and thereby stop the downward spiral of home prices. As we have said before, we favor a tax incentive for all those who buy homes within nine months of the Bill's passage; this would create a sense of urgency," Toll said.