By Kris Hudson | The Wall Street Journal
Meritage Homes Corp. has adopted a risky strategy to compete with the less-expensive market for existing homes: building more homes on speculation.
Meritage had 1,311 “spec” homes under construction and available for sale at the end of its third quarter, double its tally of spec homes from a year earlier. Meritage now has an average of 5.8 spec homes in each of its neighborhoods under development, up from 3.6 a year earlier.
Meritage, based in Scottsdale, Ariz., is betting that the move to ramp up its spec production will help it better compete with the resale market, where the nationwide median price of existing homes in September was $210,300. In comparison, the median price for new homes last month on a national basis was $259,000. Since the downturn, the gap between the median prices of new homes and resales often has exceeded $70,000, the largest difference in decades, as builders have catered to better-heeled buyers.
Related: Meritage misses earnings estimates by 11 cents, stock loses 6 percent
