Toll Brothers Q3: Deliveries Fall 10%, New Contracts Rise 5%

Toll Brothers delivered fewer homes and earned less money in its fiscal third quarter than a year ago, but buyers signed more new contracts, both in units and dollars, than they did in the same quarter of 2025. For a company that is the largest luxury for-sale builder in the country, that split says something to every builder watching for a start-now-or-wait signal: completed sales slowed, but forward demand did not.

Why it matters

Toll’s results are one of the cleanest national reads on high-end buyer demand. This quarter it delivered fewer homes at a thinner margin than a year ago, evidence it worked harder, and spent more on incentives, to move product. At the same time, its contract book got bigger. For a builder or developer weighing new for-sale starts, that combination argues demand hasn’t collapsed, it’s showing up unevenly, and Toll’s South region, which includes Florida, was the strongest part of the book.

The numbers

Net income was $280.1 million, or $2.97 per diluted share, down from $369.6 million and $3.73 a year ago. Home sales revenue was $2.65 billion on 2,662 delivered homes, versus $2.88 billion on 2,959 homes in last year’s third quarter. Net signed contracts came in at $2.52 billion on 2,508 homes, up 5% in both units and dollars from $2.41 billion on 2,388 homes.

Deliveries and revenue moved down; contracts moved up. Adjusted gross margin also slipped to 25.6% from 27.5% a year ago, though CEO Karl Mistry said the quarter came in “35 basis points above guidance” on margin, and revenue beat the midpoint of Toll’s own prior guidance.

The South region, Toll’s Arkansas-Florida-South Carolina-Texas segment, signed 697 contracts worth $638.6 million, up from 659 contracts worth $524.2 million a year ago, a 22% jump in contract value that outran the company average. South region backlog reached $1.70 billion on 1,742 homes, both up from a year ago.

The split between falling deliveries and rising contracts tells a builder that this isn’t a demand story going bad, it’s a timing and cost story: buyers are still signing, at rising prices in the South specifically, while margin absorbs more incentive load to get deals closed.

What’s next

Toll reaffirmed full-year guidance of 10,500 to 10,600 deliveries, an average price of $995,000 to $1 million, and a 26.1% adjusted gross margin. It raised its share repurchase authorization to $700 million from $650 million and ended the quarter with 471 selling communities, up from 420 a year ago, guiding to 480-490 by fiscal year end. For builders tracking the South Florida luxury market specifically, Toll’s regional contract growth there is a data point worth watching against local permit and sales activity.