Excluding pretax write-downs of $288.1 million, Toll said quarterly profit was 49 cents per share.
Analysts on average had forecast a loss of 96 cents per share, according to Reuters Estimates.
Revenue fell 30 percent to $818.8 million, exceeding analysts' estimates of $807.2 million.
The housing market has been in a tailspin as demand falls, prospective purchasers find it tougher to obtain financing, foreclosures increase, and builders cut prices.
"Demand continues to be weak in most markets as our clients worry about selling their existing homes or entering the market before prices stabilize," Chief Executive Robert Toll said in a statement.
To navigate the downturn, most builders have focused on accumulating cash and reducing debt rather while waiting for opportunities to buy land at a bargain.
Toll ended the quarter with a record-low net-debt-to-capital ratio of 22.7 percent and more than $2.5 billion of available capital, including $1.23 billion in cash.
"This liquidity will allow the company to take advantage of opportunities that arise from less financially flexible peers as we move through the downturn," said UBS analyst David Goldberg, who rates Toll a "buy" and calls it his top pick.
Toll said its backlog at the end of the second quarter fell 50 percent to $2.08 billion.
The company also said net contracts signed during the quarter, after cancellations, fell 44 percent to 929 homes. In dollar terms, they were down 58 percent at $496.5 million.
In December, Toll had posted its first quarterly loss in 21 years as a public company.
Toll shares closed Monday at $20.96 on the New York Stock Exchange. The stock is up about 8 percent so far this year.