Highlights

  • Second quarter home closing revenue fell 14% to $1.39 billion on 3,725 closings, with home closing gross margin at 18.3%.
  • Net earnings declined to $90.6 million, or $1.37 per diluted share, from $146.9 million, or $2.04, a year earlier.
  • Orders fell 9% to 3,575 homes, cancellations rose to 13%, and backlog stood at 1,715 homes valued at $661.9 million.
  • Cash totaled $807.3 million with $896.9 million of credit availability, and it repurchased $230.0 million of stock year to date.

Meritage Homes (NYSE:MTH) shares were trading near their 52-week low at USD 59.68 on October 21, 2026, down 0.91%. The homebuilder reported second quarter 2026 results in a quarterly report filed on July 31, describing softer demand, higher incentives and lower margins, alongside a larger community count and continued share repurchases.

Based in Scottsdale, Arizona, Meritage Homes is a Maryland corporation, incorporated in 1988, that designs and builds single-family attached and detached homes. It says it focuses on entry-level and first move-up buyers, and it builds in West, Central and East regions covering twelve states. Its all-spec strategy centers on move-in ready homes with a 60-day closing commitment. A financial services segment provides title and escrow, mortgage and insurance services to homebuyers. At June 30, 2026, the company was actively selling in 340 communities.

Lower Closings, Prices and Margins

For the three months ended June 30, 2026, Meritage closed 3,725 homes, down 10.7% from 4,170. Average closing price slipped 3.8% to $372,600, and home closing revenue fell 14.1% to $1.39 billion. Home closing gross profit was $253.6 million versus $341.3 million, and home closing gross margin declined 280 basis points to 18.3%. The company cited lower volume, lower prices from geographic mix and higher lot costs, partly offset by direct cost savings and shorter construction cycle times, which stayed under 110 days.

Financial services profit was $5.3 million against $5.6 million. General and administrative expenses decreased $2.8 million to $52.4 million, and commissions and other sales costs fell $17.0 million to $91.8 million. Net earnings were $90.6 million against $146.9 million. For six months, net earnings were $145.9 million, or $2.18 per diluted share, compared with $269.7 million, or $3.73, and home closing gross margin was 17.9%, 360 basis points lower.

By region, West closings dropped 29.2% to 825 homes, Central fell 4.8% to 1,308 and East fell 2.4% to 1,592. Real estate inventory impairments totaled $3.6 million in the quarter, with none a year earlier.

Orders, Backlog and Market Conditions

Home orders decreased 8.7% to 3,575, as an 18.6% slower orders pace of 3.5 net homes per month more than offset a 13.8% rise in average active communities. Order value was $1.38 billion, down 11.1%. The cancellation rate rose to 13% from 10%, which the company linked to a tougher selling environment. Backlog at quarter end was 1,715 homes valued at $661.9 million, down 1.9% and 4.8% from a year earlier.

Management described demand in the sector as softer than expected, citing affordability concerns, diminished consumer confidence and economic effects of military actions in Iran, compounded earlier in the year by severe winter storms. It said buyers increasingly depend on financing help such as rate locks and buy-downs. Community count rose to 340 from 312 a year earlier. In the six months, Meritage bought roughly 4,700 lots for $277.4 million, spent $405.8 million on land development and started 6,453 homes.

Capital Position and Outlook

At June 30, 2026, Meritage had $807.3 million of cash and $896.9 million available under its credit facility, for about $1.7 billion of total capacity. Debt-to-capital was 26.8% and net debt-to-capital 17.1%. Senior and convertible senior notes and other borrowings totaled $1.85 billion, with no material debt maturities until 2027. Operating cash flow for six months was $290.8 million. Financing activities included $230.0 million of share repurchases and $63.3 million of dividends, and the quarterly dividend was $0.48 per share compared with $0.43.

The filing does not give numerical guidance. Management says it believes the current environment will remain challenging and will require higher incentive use, while it aims to optimize assets and preserve margin. Its stated priorities include growing community count and market share, controlling costs, balancing dividends and buybacks with growth and maintaining liquidity. It states that current cash and credit facility availability provide sufficient liquidity, and that it may seek additional capital in the future.