By Shaina Mishkin

Toll Brothers reported earnings that beat estimates on Tuesday after the market closed, thanks to the strength in luxury homes.

The luxury home builder earned $2.72 a diluted share on $2.53 billion in revenue in its second quarter, better than the $2.58 a share on roughly $2.42 billion analysts polled by FactSet had expected.

"Our strong results continue to reflect our unique position as the nation's leading builder of luxury homes, with operations spanning more than 60 markets across the country," Karl Mistry, the company's CEO, said in a statement. "The strength of our brand, broad geographic footprint, and wide variety of home offerings and price points, combined with our long history serving the luxury market and its affluent customers, continues to set us apart."

The stock was up 4.9% shortly after the market opened on Wednesday.

Toll Brothers' results and third-quarter expectations are a sign that homes are still selling in the luxury realm, even as builders overall remain pessimistic about conditions for sales this spring as buyers are still squeezed by steep costs.

Toll Brothers' luxury move-up business represented the majority of its home sales revenue in the second quarter, at 62%, CEO Karl Mistry said on a Wednesday morning conference call. "Our luxury move up business has the highest margin among our buyer segments, so we are very pleased that it remains the largest part of our business."

The builder reported 2,491 homes delivered at an average price point of roughly $1.01 million, at the high range of the units it guided to and at a higher price than the $979,000 analysts had expected.

The builder's 2,834 signed contracts came in short of the roughly 2,898 consensus had expected. The builder's home sales gross margin was 23.9%. Adjusted to exclude interest and inventory write-downs, the margin was 26.2%.

Toll Brothers expects deliveries in a range from 2,600 to 2,700 units in its third quarter and foresees an adjusted home sale gross margin of 25.25%. For the full year, it expects to deliver 10,400 to 10,700 units, a modest upward revision at the low end from its first-quarter range, and an adjusted home sales gross margin of 26.1%, slightly higher than the 26% it guided to in its first quarter.

At a time when many builders are offering incentives to combat high homebuying costs at the expense of their margins, Toll Brothers' margins are higher than many of its peers.

Toll Brothers' most popular category in its first quarter -- luxury move-up homes -- is also its highest-margin business, executives said on the builder's February first-quarter earnings call.

More broadly, high-priced home sales keep growing, according to data from the National Association of Realtors. Sales of homes priced above $1 million increased 9.3% nationally from one year ago in April, compared with an overall sales figure flat with 2025.

That resilience bodes well for Toll Brothers in a pricey housing market. Its stock has weathered the tough time for housing better than others in the industry. The stock is down 6.1% this year, according to Dow Jones Market Data, compared with a 9.1% decline in the iShares U.S. Home Construction exchange-traded fund.

Builders more broadly became a little less pessimistic in May, according to a National Association of Home Builders index -- but "less pessimistic" is still far from hopeful.

"Recent increases for long-term interest rates will continue to hold back home buyer demand," Robert Dietz, the trade group's chief economist said in a statement. Mortgage rates' trajectory this spring has largely depended on expectations for inflation as a result of the war in Iran. Mortgage News Daily on Tuesday pegged the 30-year fixed mortgage rate at 6.75%, well off 2026's roughly 6% lows in January and February.

Corrections & Amplifications

Analysts expect the average price of Toll Brothers' deliveries in the third quarter will be roughly $979,000. An earlier version of this article incorrectly said analysts expect 979 deliveries.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

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May 20, 2026 10:12 ET (14:12 GMT)

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