By early afternoon, Toll shares were up by about 0.5% to $22.99, while the overall market was down. Other home builders gained, too. Hovnanian Enterprises (NYSE: HOV) shares were higher by about 8% to $5.54, while D.R. Horton (NYSE: DHI), among the nation's largest home builders, climbed about 1.5% to $13.74.

The company's stock ended Thursday's trading session down 1.2%, after it reported a much larger quarterly loss of $472.3 million, or $2.93 a share, compared to a loss of $29.3 million, or 18 cents a share, a year ago. Slow sales took a toll on the company's revenues, which fell 42 percent to $461.3 million.

Toll took a $439.4 million non-cash deferred tax allowance and write-downs totaling $115 million in the quarter. Excluding those charges, the company would have earned $3.7 million.

The announcement that the company sees the new home-building market stabilize is good news for a sector that has been pummeled by an economic crisis driven by bad mortgage loans. Stricter credit requirements have winnowed the pool of buyers of newly constructed homes as has a rise in joblessness. With many consumers wondering if they may soon be headed for the unemployment lines, few are willing to take on the debt load associated with a new home.

Toll, the nation's 14th largest home builder, said it built 792 homes, ringing up revenue of $461.4 million in the quarter.

The company's stock has benefited from the recent overall surge in stocks on Wall Street. Toll shares have gained about 45% in the last six months. For the year, shares are up nearly 7%.

Only time will tell if the company's anticipated stabilization of the housing market will materialize. With increasing signs that an economic recovery may be slow and painful, the glut of land many new home builders have in inventory may be on the books for years to come.