(Reuters) - Homebuilder Toll Brothers (NYSE:TOL) Inc beat Wall Street estimates for third-quarter profit on Tuesday, as demand for luxury homes in a tighter resale market boosted new home sales.
Shares of the luxury homebuilder rose 1.2% in aftermarket trading.
Homebuilders such as D.R. Horton and PulteGroup Inc (NYSE:PHM) have reported quarterly earnings ahead of Street estimates. Homebuilders have seen a sequential boost to their profit margins as costs and construction time decline.
"Market for new homes continues to benefit from historically low levels of resale inventory, favorable long-term demographic trends, and the persistent underproduction of homes for well over a decade," said CEO Douglas Yearley.
Existing homeowners who have a fixed mortgage rate lower than 5% have been unwilling to re-sell at a time when mortgage rates have climbed higher than 7%. This has been a tailwind for homebuilders.
Toll Brothers reported net profit of $414.8 million, or $3.73 per share, for the quarter ended July 31, up from $273.5 million, or $2.35 per share, from the year-ago period.
Analysts on average expected the company to report a profit of $2.83 per share, as per Refinitiv estimates.
Quarterly home sales revenue of $2.7 billion was 19% higher from last year and also topped analysts' estimates of $2.41 billion.