Toll Brothers (NYSE:TOL), a leading luxury homebuilder, saw its stock plunge 5.78% in the pre-market trading session on Wednesday. The sharp decline followed the company's disappointing fiscal first-quarter results, which missed analysts' expectations on both earnings and revenue.

According to the earnings report, Toll Brothers reported a profit of $177.7 million, or $1.75 per diluted share, for the quarter ended January 31, 2025. This fell short of the consensus estimate of $2.04 per share from analysts polled by FactSet. Additionally, the company's revenue for the quarter came in at $1.86 billion, lower than the projected $1.91 billion.

The weaker-than-expected performance and outlook have raised concerns among investors and analysts, particularly in light of the broader housing market challenges. Rising mortgage rates and import tariffs are expected to further drive up housing costs, weighing on demand and pressuring margins in the coming quarters. Toll Brothers CEO Douglas Yearley acknowledged these challenges, stating that "affordability constraints and growing inventories in certain markets are pressuring sales--especially at the lower end."