Meritage Homes reported lower sales, closings and earnings in the third quarter as higher mortgage rates and affordability pressures weighed on buyers. The homebuilder said it prioritized protecting margins over increasing sales pace, even as its gross margin declined from a year earlier.
For the three months ended Sept. 30, revenue from home closings fell 17% to $1.16 billion, while net earnings declined 32% to $67.8 million. Diluted earnings per share were $1.04, down from $1.39.
Key details
- Meritage closed 3,187 homes in the quarter, 14% fewer than a year earlier. The average closing price fell 4% to $365,000.
- New home orders declined 15% to 3,083. Their average price was $383,000, down 2%, and the total value of orders fell 17% to $1.18 billion.
- The company ended the quarter with a backlog of 1,611 homes, down 5% from a year earlier. Backlog value also fell 5%, to $637.2 million. The average price of homes in backlog was $396,000, up 1%.
- Home closing gross margin was 17.4%, down 1.7 percentage points from 19.1% a year ago. Earnings before taxes fell 34% to $84.8 million.
- Meritage said it achieved an average pace of 3.0 net sales per month per community. It delivered 3,187 homes across 348 communities and converted nearly 190% of its beginning backlog during the quarter.
- Management pointed to rising mortgage rates, constrained affordability and geopolitical and broader economic uncertainty as factors weighing on consumer sentiment. Executive Chairman Steven Hilton said the company chose to focus on preserving margins rather than pursuing a faster sales pace.
- For the first nine months of 2026, closings fell 12% to 9,879 homes, and home closing revenue declined 16% to $3.66 billion. Net earnings dropped 42% to $213.7 million, while diluted earnings per share fell 37% to $3.22. Gross margin for the period was 17.8%, down 2.9 percentage points from a year earlier.
The quarter’s figures show declines in both demand and profitability compared with 2025. Meritage’s stated emphasis on margin preservation shaped its sales approach, but the reported closing margin was still lower year over year.