Earnings

Meritage Cuts 2026 Closing Guidance to About 5% Below 2025

The Tip Desk · July 30, 2026 · 3 min read

The fifth-largest U.S. homebuilder closed 3,725 homes in the second quarter and now expects full-year closings and revenue around 5% below 2025.

Meritage Homes Corporation (MTH) closed 3,725 homes in the second quarter, down 11% from a year earlier, and said it now expects full-year 2026 home closing volume and revenue around 5% below 2025 results.

The year-over-year drop in closings was shallower than the 13% decline in the first quarter. Home closing revenue fell 14% to $1.39 billion, a milder contraction than the 17% year-over-year drop in the prior quarter. Average sales price on closings was $373,000, down 4% from a year earlier.

Orders were the other turn. Home orders were 3,575, down 9% from a year earlier, a steeper drop than the 5% year-over-year decline in the first quarter. The company said the order decline mainly reflected a 19% lower average absorption pace, partially offset by a 14% increase in average community count. Average sales price on orders was $385,000, down 3% from a year earlier, which the company attributed primarily to geographic mix.

Executive Chairman Steven J. Hilton said the 2026 spring selling season remained softer than expected as macroeconomic uncertainty and volatile interest rates continued to pressure buyer psychology. Chief Executive Phillippe Lord said available home inventory and improved cycle times drove a backlog conversion rate of 200%, with nearly 60% of closings generated from intra-quarter sales.

Home closing gross margin was 18.3%, 280 basis points below 21.1% a year earlier. The company said the compression resulted from lost leverage on lower home closing revenue and higher lot costs, partially offset by direct cost savings and quicker cycle times. Excluding $3.6 million of real estate inventory impairments and $0.3 million in terminated land-deal walk-away charges, adjusted home closing gross margin was 18.6%.

Net earnings were $90.6 million, or $1.37 a share, down 38% from $146.9 million, or $2.04 a share, a year earlier. Adjusted diluted EPS was $1.42. Selling, general and administrative expenses were 10.4% of home closing revenue. The company said the increase from 10.2% a year earlier reflected lost leverage, partially offset by decreased compensation expense and an intentional pullback in discretionary expenses. The effective income tax rate was 24.8%.

By region, West closings were 825 homes and $400.8 million. Central closings were 1,308 homes and $446.7 million. East closings were 1,592 homes and $540.4 million. Ending backlog was 1,715 homes and $661.9 million. Ending community count was 340, up 9% from a year earlier.

Land acquisition and development spend was $357 million, down from $509 million a year earlier. The company returned $131 million to shareholders via repurchases and dividends, including $100 million of buybacks covering 1,528,340 shares and $31 million of dividends at $0.48 a share. Cash was $807 million at June 30, 2026, with no borrowings under the revolving credit facility and a net debt-to-capital ratio of 17.1%. The company reiterated its prior expectation of 5-10% year-over-year community count growth for full-year 2026.

Based on current market conditions and year-to-date results, Meritage updated its guidance for full-year 2026 home closing volume and revenue to around 5% below full-year 2025 results, although home closing revenue could trend lower if market conditions require higher incentives.

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