Meritage Homes Reports Decline in Revenue and Profitability for Q2 2025

Meritage Homes Corporation reported its financial results for the second quarter of 2025, revealing a decline in both revenue and profitability compared to the same period last year. The company generated $1.6 billion in home closing revenue, a decrease of 4.6% from $1.7 billion in the second quarter of 2024. The number of homes closed increased slightly to 4,170 units, up 1.3% from 4,118 homes in the prior year. However, the average sales price (ASP) fell by 5.8% to $387,500, contributing to a gross profit of $341.3 million, down from $439.5 million in the previous year. The home closing gross margin also declined by 480 basis points to 21.1%.

In the first half of 2025, Meritage reported a total closing revenue of $3.0 billion, a 6.4% decrease from $3.2 billion in the same period of 2024. The company closed 7,586 homes, nearly flat compared to 7,625 homes in the prior year. The decline in revenue was attributed to a 5.9% drop in ASP, which was influenced by increased financing incentives and higher lot costs. Net earnings for the first half of 2025 were $269.7 million, down from $417.6 million in the same period last year, reflecting a higher effective tax rate of 23.6% due to fewer homes qualifying for energy tax credits.

Operationally, Meritage Homes ended the second quarter with 312 active communities, an increase from 287 communities a year earlier. The company also reported a backlog of 1,748 homes valued at $695.5 million, a significant decrease of 37.3% from the previous year. The backlog conversion rate improved to 208%, indicating a more efficient sales process. Home orders for the second quarter increased by 3.0% to 3,914, driven by a 7.1% rise in average active communities, although the orders pace slightly declined.

Strategically, Meritage Homes is focusing on providing affordable, move-in ready homes with a 60-day closing commitment, which has been a key part of its competitive strategy against the resale market. The company has also expanded its operations into Alabama and Mississippi, contributing to its growth. Financial services profit increased to $5.6 million in the second quarter, up from $4.8 million in the prior year, reflecting the benefits of new divisions serviced by its title company. Looking ahead, Meritage anticipates continued challenges from elevated mortgage rates and market conditions but remains optimistic about leveraging its strategies to maintain a competitive edge in the homebuilding sector.