Toll Brothers finished Q3 2025 with a resilient performance in a softly-breathing luxury housing market. The company delivered 2,959 homes at an average price of $974k, generating record third-quarter home sale revenues of $2.9 billion and an adjusted gross margin of 27.5%, modestly ahead of guidance by 25 basis points. SG&A was contained at 8.8% of home sale revenues, beating the guided rate by 40 basis points, underscoring ongoing operating leverage as volumes softened. Management reiterated a disciplined, price-and-margin-first strategy, emphasizing a diversified luxury product mix and a flexible spec program to navigate market conditions.
The quarterly results were supported by a strong backlog, with 5,492 homes valued at $6.376 billion and an ASP backlog of $1.16 million. The company also highlighted substantial land activity (land spend of $433 million to acquire 2,755 lots) and a sizable pipeline of 3,200 specs in construction with a further 1,800 permits ready. Toll’s balance sheet remains robust: cash and equivalents of about $852 million; net debt-to-capital around 19.3%; liquidity of roughly $2.2 billion available under revolver facilities; and a quarterly dividend plus sizable share repurchases ($201.4 million in Q3, with full-year guidance of around $600 million for buybacks).
Management reaffirmed 2025 guidance, maintaining annual deliveries around 11,200 homes and an adjusted gross margin target of 27.25%. Fourth-quarter guidance calls for ~3,350 deliveries at a blended ASP of $970k–$980k, supporting a full-year ASP of $950k–$960k and a 27% fourth-quarter gross margin, with SG&A around 8.3% of home sales revenues. While near-term demand remains sensitive to rates and macro dynamics, Toll remains positioned to ramp capital-efficient growth via land acquisition, controlled spec starts, and a scalable spec business model. The management tone is cautiously constructive about near-term demand, with clearer visibility into 2026 expected in December.