(Disclosure: Rose Law Group represents Meritage Homes.)
By Vincent Salandro | Builder
Meritage Homes’ pivot to affordable, quick-turning move-in-ready homes paid dividends in the fiscal third quarter, with the home builder reporting a company-record backlog conversion rate and the highest third quarter closing volume in company history.
“Our rate buydown offerings in July and August and the pullback in mortgage rates in September all contributed to order volume that slightly outpaced traditional seasonality, aiding us to achieve orders totaling 3,512 homes this quarter with average monthly absorptions of 4.1,” executive chairman Steven Hilton said.
Meritage Homes’ third quarter order volume represented a 1% increase compared to the third quarter of 2023. Third quarter average sales price (ASP) on orders was $406,000, down 6% on a year-over-year basis due to a product and geographic mix shift as well as increased financing incentive costs. Entry-level homes represented 92% of third quarter sales, up from 88% in the third quarter of 2023. The builder generated a third quarter profit of $196.0 million, or $5.34 per share, down from $221.8 million, or $5.98 per share, a year ago.
Home closing revenue in the quarter was $1.6 billion, down 2% on a year-over-year basis. The decline was largely due to a 9% decrease in ASP on closings. Home closings increased 8% year-over-year to a third-quarter record 3,942. Entry-level homes accounted for 93% of third quarter home closings. The builder’s cancellation rate remained below historical levels at 10% in the third quarter, according to CEO Phillippe Lord.
