Meritage Homes Record 345 Communities Cannot Offset A 400 Basis Point Gross Margin Drop!

Meritage Homes Corporation reported first quarter 2026 results amid challenging market conditions influenced by external factors such as a severe winter storm and geopolitical events that affected interest rates, inflation, and consumer confidence. The company recorded 3,664 home sales orders, marking a 5% decrease year-over-year primarily due to an 18% decline in average absorption pace; however, this was almost fully offset by a 17% increase in community count, which rose 19% year-over-year to a record 345 active communities. The strategy to grow community count rather than increase per-store absorption rates reflects a cautious posture amid current demand hesitancy. Operationally, Meritage Homes delivered 2,967 homes with closing revenue of $1.1 billion, representing a 17% decrease from the prior year due to fewer closings and a 5% decline in average selling price (ASP), influenced by increased incentives and geographic mix shifts toward lower-priced regions. Gross margin on home closings declined to 17.