Meritage Homes earnings fell 32% in the third quarter of 2026 as the homebuilder closed fewer homes and received fewer orders. Net earnings were $67.8 million, down from $99.3 million a year earlier, the company reported on October 28.

Key Takeaways

  • Home closing revenue fell 17% to $1.16 billion, while orders declined 15%.
  • Home closing gross margin narrowed to 17.4% from 19.1% a year earlier.
  • Meritage reduced quarterly land acquisition and development spending to $329 million from $528 million.

Meritage Homes earnings and margins

Diluted earnings per share were $1.04 for the three months ended September 30, 2026, compared with $1.39 a year earlier. Meritage attributed the decline in net earnings mainly to lower home closing revenue and gross profit.

The company closed 3,187 homes, down 14% from 3,685 in the third quarter of 2025. The average closing price fell 4% to $365,000. Meritage said greater use of incentives, including mortgage rate buy-downs, and geographic mix were the primary reasons for the lower price.

Reported home closing gross margin fell by 1.7 percentage points. Meritage cited higher lot and incentive costs and less leverage on lower revenue, partly offset by direct cost savings and lower performance-based compensation.

In its 2025 explanation of adjusted gross margin, Meritage excluded inventory-related charges. For the third quarter of 2026, adjusted home closing gross margin was 17.9%, excluding inventory impairments and a net credit related to terminated land deals, compared with 20.1% on an adjusted basis a year earlier.

Orders and land spending

Orders fell to 3,083 homes from 3,636 a year earlier. Meritage said a 21% decline in the average sales pace per community was partly offset by a 7% increase in the average community count.

Executive Chairman Steven J. Hilton said rising mortgage rates and affordability pressures weighed on buyers. He said the company focused on preserving margins rather than pursuing a faster sales pace.

Land acquisition and development spending, net of reimbursements, fell to $329 million from $528 million in the prior-year quarter. Meritage ended September with $677 million in cash and no borrowings under its revolving credit facility.

Next milestone

Management is scheduled to discuss the results on a conference call at 8 a.m. Pacific time on October 29, 2026.

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