HORSHAM, PA-Toll Brothers Inc. and Orleans Homebuilders Inc. of Bensalem, Pa. are reporting lower revenue but remain upbeat despite cancellations and dribbling sales. In conference calls Thursday, Toll chairman and CEO Robert Toll said first-quarter revenue fell 19% to about $1.09 million compared to $1.34 million in the comparable 2006 period. Toll’s quarter ended Jan. 31.

“The pace of cancellations is starting to abate,” Toll said. First quarter cancellations totaled 436 (30%) compared to 585 (37%) in the last quarter of 2006. In a thriving economy, the company generally has a 7% cancellation rate.

Toll said his company’s backlog is down 30% to $4.15 billion. The number of signed contracts was down 34% to $749 million. “Home-buying activity (still) feels encouraging,” the CEO said. The company is considering writing down $60 million for the quarter but that number could be much higher, Toll said.

Orleans’ second quarter ended Dec. 31, showing a loss of $7.5 million or a loss of 41 cents a share compared to net income of $15.4 million or 82 cents a share in second quarter 2006. The company now expects annual revenue to be in the $690 million to $725 million range, down from an anticipated $750 million to $780 million for fiscal 2007 which ends June 30. Orleans’ cancellation rate for the six months ending Dec. 31, 2006 was about 27% versus 18% in the same 2005 period.

In a prepared statement following the conference call, Orleans officials say “unfavorable market conditions” in the housing industry have negatively impacted the company’s new order activity. Those conditions include increased new and resale home inventory levels “primarily caused by speculators attempting to sell their homes,” and decreased consumer confidence “as reluctant homebuyers delay their purchase decisions.”

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