Meritage Homes Corporation reported a decline in financial performance for the fiscal year ended December 31, 2025, with home closing revenue totaling $5.8 billion, a decrease of 9.1% from $6.3 billion in 2024. This decline was attributed to a 3.7% reduction in home closing volume, which fell to 15,026 homes, and a 5.6% decrease in the average sales price (ASP) on closings, which was approximately $384,000. The company's home closing gross margin also decreased to 19.7%, down from 24.9% in the previous year, primarily due to increased financing incentives, higher lot costs, and charges related to terminated land contracts.
In response to the challenging market conditions, Meritage Homes implemented strategic changes, including a focus on move-in ready homes and a commitment to a 60-day closing guarantee. The company reported that its construction cycle times improved to under 110 days, down from the historical average of 120 days, which contributed to higher backlog conversion rates. The total number of homes in backlog decreased by 24.4% to 1,168 units, valued at $440.6 million, reflecting the company's strategy to sell a higher percentage of spec homes later in the construction cycle.
Operationally, Meritage Homes maintained a strong presence in the homebuilding market, actively selling homes in 336 communities across 12 states. The company reported an increase in average active communities by 11.6%, although the order pace decreased by 9.3% to 3.9 homes per month. The cancellation rate rose to 11% from 9% in 2024, attributed to buyer hesitancy amid affordability concerns. Despite these challenges, the company continued to focus on its core values of delivering affordable homes and enhancing customer satisfaction through energy-efficient designs and streamlined processes.
Looking ahead, Meritage Homes expressed confidence in its strategic initiatives to capture market share as demand improves. The company plans to leverage its partnerships with external realtors and continue offering financing incentives to attract buyers. With a cash and cash equivalents balance of $775.2 million at year-end, the company is well-positioned to navigate the current market conditions and pursue growth opportunities in the future.
About Meritage Homes CORP
Meritage Homes is a leading homebuilder specializing in designing and constructing energy-efficient, affordable single-family homes across high-growth regions in the U.S. It operates in multiple markets, offering entry-level and first move-up homes, with a focus on streamlined construction, move-in readiness, and digital sales tools. The company also provides financial services, including title, escrow, mortgage, and insurance, supporting a comprehensive homebuying experience.
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