Meritage Homes Third-Quarter Earnings Fall 32% as Orders Slip Further

The Tip Desk · November 2, 2026 · 3 min read

Third-quarter home closing revenue was $1.16 billion, down 17% from a year earlier, as the company closed 3,187 homes and booked 3,083 orders.

Meritage Homes Corporation (MTH), the fifth-largest U.S. homebuilder, reported home closing revenue of $1.16 billion for the three months ended September 30, 2026, down 17% from a year earlier, as closing volume fell 14% to 3,187 homes and average sales price on closings dropped 4% to $365,000.

The year-over-year revenue decline widened from the 14% drop to $1.39 billion in the second quarter. The company attributed the closing-price decline primarily to higher utilization of incentives and related costs including rate buy-downs, as well as geographic mix.

Orders of 3,083 homes fell 15% year-over-year, a steeper sequential decline than the 9% year-over-year drop to 3,575 units in the second quarter. Average absorption pace fell 21% year-over-year, partially offset by a 7% increase in average community count. Average sales price on orders was $383,000, down 2% from the year-ago quarter.

Executive chairman Steven J. Hilton said constrained affordability weighed on consumer sentiment in an environment of rising mortgage rates and geopolitical uncertainty, and that the company intentionally focused on preserving margins rather than pursuing a higher sales pace. Average absorption was 3.0 net sales per month per store. Chief executive Phillippe Lord said the company converted nearly 190% of backlog across 348 communities.

Home closing gross margin was 17.4%, down 170 basis points from 19.1% a year earlier, as higher lot and incentive costs and lost leverage on lower revenue were partially offset by direct cost savings and lower performance-based compensation. Excluding $6.6 million of real estate inventory impairments and a $0.6 million net credit related to terminated land deal walk-away charges, adjusted home closing gross margin was 17.9%, versus 20.1% in the year-ago quarter. The company incurred $0.9 million of walk-away charges, more than offset by $1.5 million of recoveries on previously incurred charges.

SG&A was 11.0% of home closing revenue, compared with 10.8% a year earlier, from lost leverage and higher technology costs, partially offset by a pullback in discretionary expenses and lower performance-based compensation. The third-quarter effective tax rate was 20.1%, versus 22.6% in 2025, which the company said reflected acquired below-market transferable clean fuel production tax credits.

Net earnings fell 32% to $67.8 million from $99.3 million a year earlier, while diluted EPS fell 25% to $1.04 from $1.39. Excluding quarterly impairments and walk-away charges, adjusted diluted EPS was $1.11, versus $1.55 a year earlier.

Ending backlog was 1,611 units and $637.2 million, with backlog ASP of $396,000. The East region closed 1,307 homes for $436.6 million and took 1,245 orders for $430.2 million. The Central region closed 1,170 homes for $384.0 million and took 1,132 orders for $397.0 million. The West region closed 710 homes for $341.8 million and took 706 orders for $352.0 million. Ending community count was 348, up 4% year-over-year.

Land acquisition and development spend, net of reimbursements, was $329 million, down almost 40% year-over-year. Lots owned or controlled were about 71,800, versus about 80,800 a year earlier. Nearly 2,000 net new lots were added in the quarter, representing an estimated 21 future communities.

Cash and cash equivalents were $677 million at September 30, 2026, with no borrowings under the revolving credit facility and a net debt-to-capital ratio of 18.9%. The company repurchased 757,128 shares for $55 million and paid a $0.48-a-share dividend totaling $31 million, returning $86 million to shareholders in the quarter. Lord said the company expects market conditions to continue to be unpredictable over the next several quarters.