Luxury homebuilder Toll Brothers Inc. rose to a record Wednesday as the company said it's optimistic about its prospects for a key selling season.
Since mid-January, "we have seen a meaningful uptick in demand that has continued through this past weekend," Chief Executive Officer Doug Yearley said in an earnings call Wednesday.
The builder lifted its outlook for home deliveries in its fiscal year. Shares climbed 6.1% to $109.61 at 10:09 a.m. Wednesday, the biggest intraday jump since the middle of December.
Buyers have turned more to builders as shoppers grapple with a lack of listings for previously owned homes. That's benefited companies such as Toll, which reported that orders in the three months ended Jan. 31 jumped 40% from the same period a year earlier.
Toll's comments signal a solid start for the builder's typically busiest season. Few of the company's buyers are choosing to accept a mortgage rate buydown option, which has been popular with other builders given that rates are more than double what they were at the start of 2022. Toll's more affluent buyers are taking other incentives instead because they don't need lower rates to qualify for a mortgage, Yearley said.
Toll has been shifting from its traditional build-to-order model by offering more "spec" homes, meaning it starts construction before buyers are lined up. The company said half of orders in the quarter were to buyers who signed contracts after the foundation was poured. With the tight existing home inventory, this gives buyers an opportunity to buy houses closer to being complete and, depending on the stage of construction, to also pick their finishes.
"We are building spec across all of our price points, all of our product lines," Yearley said on the call.
