Toll Brothers Inc. posted stronger-than-expected profit growth in its April quarter, boosted by a lower tax provision and strength in the luxury home builder's California business.

Revenue came in below Wall Street expectations.

Toll Brothers, with its higher-end offerings, has expected to benefit from recent improvements to job and wage growth, which it says drive stronger housing demand. Home prices have picked up in recent months, reflecting a mix of thin supply and strong demand that points to heated competition for home buyers.

"It appears the housing market is on firm footing and heading in the right direction," said Executive Chairman Robert Toll in a news release Wednesday. "As pent-up demand is released, we envision a gradual and elongated recovery for housing."

Toll has said its customers benefit from higher home prices, as many of its customers are selling their homes and upgrading.

In the latest quarter, signed contracts rose 25% in value from a year earlier to $1.6 billion, with an average price of $826,000, up 13% from a year earlier.

The company said its California communities accounted for about 30% of the total value of signed contracts in the quarter.

Overall, for the fiscal second quarter ended April 30, the company posted a profit of $67.9 million, or 37 cents a share, compared with $65.2 million, or 35 cents a share, a year earlier.

The quarter's results included an $18.6 million income tax provision, down from $28.3 million a year earlier.

Revenue inched down about 1% to $852.6 million.

Analysts polled by Thomson Reuters had expected a per-share profit of 35 cents on revenue of $861.2 million.

The company's gross margin widened to 25.3% from 23.7% a year earlier, excluding interest and write-downs.

The company said it delivered 1,195 units in the period, down 2% from the year-ago quarter. The average price of homes delivered was $713,000, compared with $706,000 a year ago.

For its fiscal year ending in October, the company narrowed its delivery guidance to between 5,300 and 5,900 homes, compared with its previous guidance of 5,200 to 6,000 homes. The company also lifted the lower end of its average price forecast by $5,000, now calling for $730,000 to $760,000.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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