Luxury-home builder Toll Brothers (TOL - Get Report) beat fiscal third-quarter earnings estimates despite a drop in new orders.

The company posted earnings of $1 a share vs. $1.26 in the year-earlier period. Analysts were expecting a profit of 82 cents a share, according to Zacks. Sales of $1.77 billion topped analysts' estimates.

Adjusted gross margin in the period was 23.1% vs. 24.3% a year ago. 

Signed contracts, which represent new orders, totaled $1.9 billion for 2,241 homes, down from $2 billion and 2,316 homes a year ago, Toll Brothers said.

"While our third-quarter contracts were down modestly, we are off to a good start in our fourth quarter," Toll Brothers CEO Douglas C. Yearley said in a statement. "Low mortgage rates, a limited supply of new and existing homes, and a strong employment picture are providing tailwinds."

Toll Brothers shares were trading off 4.2% to $35.35.

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Constable owns none of the securities listed in this story.