Meritage closed nearly twice its starting backlog and cut land spending 40%
Meritage sold and closed a large share of its homes inside the same quarter and chose margin over sales pace, so buyers should push for financing help and land sellers should expect a slower buyer.
By Alex Pham · · 3 min read
Meritage Homes closed 3,187 homes in the third quarter, down 14%, and home closing revenue fell 17% to $1.16 billion [1]. Management said the company “intentionally focused on preserving margins rather than pursuing a higher sales pace” [1].
Its home closing gross margin still declined to 17.4% from 19.1%, and adjusted margin to 17.9% from 20.1% [1].
Meritage closed far more homes than it had under contract when the quarter began
Management said it converted “nearly 190%” of its backlog [1]. Meritage closed almost twice as many homes as it had under contract when the quarter began, which points to buyers signing for homes already under construction.
Meritage tied its lower average price to “higher utilization of incentives and related costs including rate buy-downs” and to geographic mix [1]. The average closing price was $365,000, and the average order price was $383,000 [1].
| Meritage, Q3 | 2025 | 2026 |
|---|---|---|
| Homes ordered | 3,636 | 3,083 |
| Homes closed | 3,685 | 3,187 |
| Average closing price | $380,000 | $365,000 |
| Average order price | $389,000 | $383,000 |
| Ending communities | 334 | 348 |
| Backlog, homes | 1,699 | 1,611 |
| Lots owned or controlled | about 80,800 | about 71,800 |
The average community sold 3.0 homes a month, 21% fewer than a year earlier [1].
Meritage is buying less land and holding more of it idle
Land acquisition and development spending fell almost 40% to $329 million [1]. Land held for development, held for sale or mothballed grew to $267.3 million at Sept. 30 from $164.4 million at the end of 2025 [2].
Meritage had 36,644 lots under purchase or option contracts backed by $170.8 million of deposits [2]. Write-offs on terminated land deals turned into a net recovery of $0.6 million, against a $5.8 million charge a year earlier [2].
How to use this
For buyers of new homes
- Ask for a rate buydown or paid closing costs before a price cut, since Meritage said it is protecting margin over pace [1]. On its $365,000 average price with 10% down, we calculate principal and interest at about $2,239 a month at Freddie Mac’s 7.24% average [3] and about $2,020 at 6.24%.
- Find out which homes can close within the current quarter. Meritage closed nearly twice its starting backlog [1], so homes already under construction are the inventory it is selling.
For land and lot sellers
- Use Meritage’s own deposits as a benchmark in talks. By our math its $170.8 million of deposits on 36,644 optioned lots averages about $4,660 a lot [2].
- Expect slower approvals on new deals and plan for other buyers. Meritage cut land spending to $329 million and controls about 9,000 fewer lots than a year ago [1].
- Check whether Meritage holds land near yours. Its land held for sale or development or mothballed rose 63% in nine months, we calculate [2], and any of it sold could compete with your lots.
For investors and lenders
This is market commentary, not investment advice.
Sources
- [1]Meritage Homes Corporation, Meritage Homes reports third quarter 2026 results (company press release, reprinted by Finviz; filed as SEC Form 8-K exhibit), Oct 28, 2026.
- [2]Meritage Homes Corporation, Quarterly report for the period ended Sept. 30, 2026 (SEC Form 10-Q), Oct 2026.
- [3]Freddie Mac, Primary Mortgage Market Survey, week of Oct. 29, 2026, Oct 29, 2026.
