Meritage Homes reported third quarter 2026 results that fell short of analyst expectations, impacted by a challenging homebuying environment and rising mortgage interest rates. Management noted that constrained affordability weighed on consumer sentiment, leading to an intentional focus on preserving margins rather than aggressively pursuing sales volume.
Key Highlights
- Home closing revenue of $1.17 billion decreased 17% year-over-year, missing the $1.30 billion estimate due to 14% lower closing volume and a 4% decline in average sales price.
- Diluted EPS of $1.04 missed the $1.18 consensus estimate, primarily driven by the revenue decline and margin compression.
- Home closing gross margin contracted 170 basis points year-over-year to 17.4% (17.9% on an adjusted basis), pressured by higher utilization of buyer incentives and rate buy-downs.
- Total sales orders fell 15% to 3,083 homes, reflecting a 21% decrease in the average absorption pace to 3.0 net sales per month per store.