The Horsham-based builder yesterday reported a $96 million loss for the three months that ended Jan. 31, reflecting worsening conditions in most of the company's markets around the country.

Total revenue for the quarter was $842.9 million, compared with $1.09 billion a year earlier. The first-quarter backlog of unsold homes was 42 percent lower, however, at $2.40 billion, compared with $4.15 billion, the company said.

New-home inventories across the board continued to fall in January for the 10th straight month, even as sales nationally dropped 2.8 percent from January 2007, the Commerce Department reported yesterday.

Median and average prices were both down 10 percent in the period nationally as well, but economists and industry analysts expect that builders will continue to aggressively price new homes and that sales will bottom out later this year.

Toll Bros.' quarterly loss of $96 million, or 61 cents a share, compared with profit of $54.3 million, or 33 cents a share, a year earlier.

"The selling season, which we believe starts in mid-January, has been weak for the third year in a row," Toll said. "We have seen a few glimmers of hope, for example, in the Naples, Fla., area and the suburban Washington, D.C., market."

Toll Bros. sells new homes in 21 states. Two-thirds of the first-quarter pretax write-downs were in the troubled markets of Florida, Nevada and Arizona, said Joel H. Rassman, chief financial officer.

Toll said in a conference call with analysts that he did not want to appear overly exuberant in his discussion of just two markets, since "we're waiting for another 35 markets" to report in.

However, "ceaseless talk of a recession continues to dampen the mood of consumers in general, whether or not a recession actually occurs," Toll said. "For home buyers, we believe this drumbeat, coupled with concerns over mortgages, the direction of home prices, and foreclosures, has kept pent-up demand on the sidelines."

While it is difficult to predict what will happen during the year, Rassman anticipates the company will deliver 3,900 to 5,100 homes during the year, with an average price of $630,000 to $650,000.

The company said its cancellation rate was 28 percent in the first quarter, down from a record 39 percent in the previous three months. The net value of contracts dropped 50 percent to $375 million from a year earlier.

Company shares closed up 71 cents, or 3.07 percent, at $23.83 on the New York Stock Exchange.

Most analysts say Toll Bros.' substantial assets are helping boost the company's stock price.

"We believe Toll can maintain a solid balance sheet," said Bank of America Corp. analyst Daniel Oppenheim, adding that the company remained able to buy land from distressed builders.

"Meanwhile, we believe Toll's current land position will continue to generate cash, even amid declining prices, since much of the necessary cash outlays came in previous years," Oppenheim said.

Bear Stearns Cos. Inc. analyst Susan Berliner asked Toll when he thought the market would come back.

"It could begin tomorrow," he replied, but emphasized that "revived buyer confidence is the key" to recovery.

Bruce Toll, vice chairman of Toll Bros., is also chairman of Philadelphia Media Holdings L.L.C., which owns The Inquirer, Philadelphia Daily News and Philly.com.