Citing the worst housing slump in decades, luxury-home-builder Toll Bros. Inc. yesterday reported its first quarterly loss since it began selling shares on the stock market in 1986.

Robert I. Toll, chairman and chief executive officer of the Horsham-based builder, said 2007 was by many measures "the most challenging of the 40 years that Toll Bros. has been in business."

The year "1974 was perhaps rougher, but the difficult times only lasted one year," he said.

The company's net loss of $81.8 million, or 52 cents a share, for the fourth quarter compared to net income of $173.8 million, or $1.07 a share, a year earlier.

His management team predicted that company revenue, which plummeted 24 percent in fiscal 2007, would continue falling in 2008. Managers also pegged the average closing price of a company home at $630,000 to $650,000, down 3 percent to 6 percent, and declined to give earnings guidance for next year.

In a wide-ranging discussion yesterday with Wall Street analysts, Toll said: "I'd probably think we're going to have a recession." He added, "It's nothing more than an uneducated person's opinion."

He also criticized President Bush's proposal to freeze interest rates on subprime mortgages set to rise in the coming months. There is no such thing as a subprime loan, just a subprime borrower, Toll said. And the effort, he said, will not help a lot of better-off borrowers who also took mortgages with ballooning rates.

If he were "running the zoo," Toll said, he would cap all teaser rates at 8 percent or 8 1/2 percent.

Toll executives yesterday dished out plenty of dismal news along with assurances that the company, focused on the luxury-housing market, had ample reserves to weather the downturn.

Toll said the quarterly loss was driven by $314.9 million in pretax write-downs, reflecting the falling value of the company's communities. The weakest region was the far west, including Arizona, where the company had just 17 net contracts in the quarter, down 87 percent.

Real estate in the Philadelphia region did not rise so high - and has not fallen so fast - as that in other areas, a company spokesman said.

Toll's shares had a banner day, rising $2.70, or 13.03 percent, to $23.42.

But Michael Church, senior portfolio manager of Church Capital Management Inc., an investment adviser in Yardley, said he thought it was too early to jump back into the company's once-high-flying stock.

"I think the home builders are going to continue to be challenged," he said. "I don't think this is going to be turned around anytime soon."

Toll Bros. still made money in fiscal 2007, which ended Oct. 31, earning $35.7 million on $4.6 billion in revenue. But the results were a fraction of 2006's frenetic numbers, when the firm made $687 million on $6.1 billion in sales.

Several analysts noted that the company had $900 million in cash and had access to $1.2 billion in credit.

Toll said he believed people still wanted to buy homes. Visits to the firm's Web site were up 8 percent in October, compared with September.

But the problem, he said, is that people cannot sell their existing homes. He cited the case of a prospective buyer who nearly backed out of a Toll purchase because he could not sell his original home. So he got a new mortgage - covering both his old home and his Toll home - to avoid losing his $70,000 deposit.

"He's now making mortgage payments that are 80 percent of his income," Toll said. "He's doomed to failure."

Toll also said the firm considered doing some high-rise deals in China, but rejected them for the moment. "One of the issues is getting your money out after you've gotten your money in," he said.

Toll's brother, vice chairman Bruce Toll, is chairman of Philadelphia Media Holdings L.L.C., which owns The Inquirer, the Daily News and Philly.com.

Contact staff writer Karl Stark at 215-854-5363 or kstark@phillynews.com.