(Read more on the multifamily market.)

HORSHAM, PA-Preliminary results for Toll Brothers Inc.’s fiscal fourth quarter portray a dismal housing picture that continues its downward spiral. The luxury homebuilder’s revenues fell to $1.2 million, down 36% from the same quarter a year ago.

Net signed contracts for the quarter totaled 656 homes, a decline of 35% in units, which represented sales of $365.2 million, a 48% drop in dollars. Among gross contracts signed in the fourth quarter, the average price per unit was $646,000, compared with $667,000 in the fiscal third quarter of 2007. Among contracts that carried through to sales, however, the average price fell to a much lower $557,000 a unit.

That is a result of two factors: a concentration of cancellations in higher-price homes in high-price markets and a shift in the type of units sold. The multifamily proportion of sales rose, and multifamily units tend to be less expensive. In fiscal fourth quarter 2006, single-family units represented 59% of total sales, Robert Toll, president and CEO, said during a conference call. By contrast, in the most recent quarter, single-family accounted for just 49% of sales. While he expects this shift in the mix to continue into 2008, he called it short-term and said, “we’re not shifting the nature of our business.”

There were 417 cancellations in the fiscal fourth quarter totaling $328.5 million, compared with 585 cancellations totaling $412.3 million in the same quarter of 2006. Though the number of cancellations was lower, the proportion of cancellations to contracts signed continued to increase. The average price of the 417 cancellations was $788,000 a unit. The loss of those high-price sales combined with a rise in multifamily unit sales to drive down the overall average.

In grading geographic markets, Toll gave none an A, and just five relatively confined areas a B. They are New York City, Connecticut, and Hoboken, Jersey City and Princeton, NJ.

More than a dozen markets were given Fs, and Toll differentiated among F, F-minus, and F-minus-minus, he said, “to show the extent of drops in the market from miserable to purgatory.” Las Vegas fell to the bottom of his ranking, not far below Arizona, Reno, Atlanta, Chicago, Michigan, three Florida markets and several in California, which is where a majority of cancellations occurred.

Noting that the last housing slump lasted from 1987 until early 1991, Toll said, “it’s pretty much worse now, not by much, but worse. We have been in the current down period since September 2005. We can’t predict how long this down period will last.

“We continue to believe that excess supply created by cancellations, speculative buyers and overly ambitious builders, customer concerns about selling their existing homes, and a general lack of confidence are the primary impediments to our market’s recovery,” he said. He saw no sign that an inability to obtain mortgages was affecting his company’s buyers, “although it may affect our buyers’ buyers,” he acknowledged.

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