Dive Brief:

• Generally, buyers of high-end homes like the ones Toll Brothers produces have a lot of price elasticity, but it appears that even they stretch just so far, and Tolls Brothers reports sales contracts since its most-recent quarter ended Oct. 31 are off about 10%.
• The company said price increases that have risen 21% in the last year were partly to blame, but it also blamed a percentage-point increase in mortgage rates over the summer and overall uncertainty caused by federal budget fighting.
• The average price of a Toll Brothers home is now $703,000, and some analysts said that seems to be a ceiling for at least a while, based on the contract numbers.

Dive Insight:

The reduction in signed sales certainly doesn't mean Toll Brothers is in any trouble. Revenue for the quarter was up 65% from the year before and topped $1 billion. The company's report also showed that its urban division, selling townhomes and condominiums in four East Coast cities, brought in 6.4% of the revenue over the last four quarters. Those residences have a profit margin above 30%.