As a result, the luxury homebuilder "is in a substantial cutback mode," Toll said during a conference call. "Before the obvious doldrums, we were hiring and training for continued expansion. Now, it is obvious we will not see expansion for a year, two at most." The hardest hit areas are in the Mid-Atlantic, Midwest and California markets. Revenue rose in the Northeast, Southeast and Southwest.

The company anticipates delivering between 8,600 and 8,900 homes this year at an average price range of $685,000 to $690,000. For 2007, it projects from 7,000 to 8,000 home deliveries at prices of between $635,000 and $645,000. The price reduction is attributed to more sales of lower-priced and smaller multifamily, active adult and single-family units.

Toll conceded that the bottom of the market is not yet in sight, but reiterated a belief that "when buyers become confident that home prices have hit bottom, the market will return to a firm footing." He blamed the downturn largely on an oversupply of inventory and steep discounts by builders, conditions that cause consumers to sit on the sidelines.