Meritage Homes Reports Decline in Q3 2025 Financial Performance

Meritage Homes Corporation reported a decline in financial performance for the third quarter of 2025, with home closing revenue totaling $1.4 billion, an 11.8% decrease from $1.6 billion in the same period last year. The company closed 3,685 homes during the quarter, down 6.5% from 3,942 homes in the prior year. The average sales price (ASP) for homes also fell by 5.6% to $379,700, contributing to a gross profit of $267 million, down from $392.6 million in the previous year. The home closing gross margin decreased to 19.1%, a decline of 570 basis points compared to the prior year, primarily due to increased costs and the utilization of incentives.

For the nine months ended September 30, 2025, Meritage reported home closing revenue of $4.4 billion, an 8.2% decrease from $4.7 billion in the same period of 2024. The company closed 11,271 homes, a 2.6% decline year-over-year, with a gross profit of $903.9 million, down from $1.2 billion. The gross margin for the nine-month period was 20.7%, reflecting a 480 basis point decrease from the previous year. The decline in profitability was attributed to higher lot costs, increased use of incentives, and real estate-related impairments.

Operationally, Meritage Homes ended the third quarter with 334 active communities, an increase from 278 a year earlier. The company purchased approximately 12,200 lots for $719.6 million and started construction on 10,756 homes during the nine months ended September 30, 2025. Home orders for the quarter increased by 3.5% to 3,636, although the cancellation rate rose to 11% from 10% in the prior year. The backlog of homes decreased significantly, with 1,699 homes valued at $670 million, down 25.6% in units and 28.1% in value compared to the previous year.

In terms of financial health, Meritage reported total assets of $7.76 billion as of September 30, 2025, up from $7.16 billion at the end of 2024. The company’s liabilities increased to $2.47 billion, primarily due to a rise in senior and convertible senior notes, which totaled $1.8 billion. The company maintained a strong liquidity position with $728.9 million in cash and cash equivalents and $825.9 million available under its credit facility. Looking ahead, Meritage anticipates continued challenges in the homebuilding sector due to elevated mortgage rates and increased competition from resale homes, but remains focused on its strategy of offering affordable, move-in ready homes to attract buyers.