Meritage Homes CORP recently released its 10-Q report. Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family attached and detached homes in the United States through two segments: Homebuilding and Financial Services. It acquires and develops land, constructs and sells homes for entry-level and first move-up buyers in 12 states, and provides title, escrow, mortgage, insurance, title insurance, and closing services to its homebuyers. Founded in 1985 and based in Scottsdale, Arizona, the company continues to focus on affordable, move-in ready homes.
In Item 2, management said the second quarter of 2026 was marked by softer demand, with affordability concerns, weaker consumer confidence, and economic effects from military actions in Iran weighing on buyers. Meritage said its financing incentives, including interest rate locks and buy-downs, remained a key selling tool versus resale homes, while its all-spec strategy kept construction cycle times under 110 calendar days, below its historical normalized level of about 120 days.
Second-quarter home closings fell to 3,725 from 4,170 a year earlier, down 10.7%, and home closing revenue declined 14.1% to $1.388 billion from $1.616 billion. Average sales price on closings fell 3.8% to $372,600, and home closing gross profit dropped to $253.6 million from $341.3 million, with gross margin narrowing 280 basis points to 18.3% from 21.1%.
The company’s six-month results showed the same pattern. Home closings fell 11.8% to 6,692, home closing revenue declined 15.6% to $2.496 billion, and average sales price on closings decreased 4.4% to $372,900. Home closing gross margin fell to 17.9% from 21.5% a year earlier, and home closing gross profit decreased by $189.6 million.
Net income for the quarter was $90.6 million, down from $146.9 million a year earlier. Earnings before income taxes were $120.6 million versus $193.1 million, while the effective tax rate rose to 24.8% from 23.9%. For the first half, net income was $145.9 million, compared with $269.7 million in the prior-year period.
Home orders also slowed. Second-quarter orders totaled 3,575, down 8.7% from 3,914, while order value fell 11.1% to $1.376 billion. The company said order pace dropped 18.6% to 3.5 net homes per month, partly offset by a 13.8% increase in average active communities. Cancellation rates rose to 13% from 10% in the quarter and to 12% from 9% for the first half.
Backlog at June 30, 2026 stood at 1,715 homes valued at $661.9 million, down from 1,748 homes and $695.5 million a year earlier. Active communities increased to 340 from 312 a year earlier and 336 at year-end 2025. During the first six months of 2026, Meritage purchased about 4,700 lots for $277.4 million, spent $405.8 million on land development net of reimbursements, and started construction on 6,453 homes.
By region, second-quarter home closing revenue was $400.8 million in the West, $446.7 million in the Central region, and $540.4 million in the East. Home orders were $391.2 million in the West, $439.9 million in the Central region, and $545.3 million in the East. At quarter-end, backlog was valued at $173.2 million in the West, $218.7 million in the Central region, and $270.0 million in the East. The market has reacted to these announcements by moving the company's shares -0.86% to a price of $70.20. If you want to know more, read the company's complete 10-Q report here.
