Meritage Homes Sets Sights on Certainty in Uncertain Times
Meritage Homes, a leading homebuilder in the United States, has kicked off 2025 with a healthy start, selling nearly 3,900 homes in the first quarter. Despite January's slower-than-anticipated sales, the company delivered its second-highest first-quarter orders and closings in history, thanks to a plentiful supply of available inventory and attractive financing incentives.
According to Meritage Homes' Executive Chairman, Steve Hilton, the company's strategic pivot has enabled it to overcome volatile mortgage rates and fragile consumer sentiment. "We had a healthy start to 2025," he said during the company's first-quarter analyst call. "Despite some softening of the housing market due to macroeconomic conditions, we delivered our second-highest first-quarter orders and closings in company history."
Meritage Homes' average absorption pace was 4.4 net sales per month this quarter, a testament to the company's ability to capitalize on the higher demand of the spring selling season. The company's backlog conversion rate was an all-time high of 221%, reflecting the benefit of its strategic pivot and releasing homes for sale in the 60 days of completion.
The company's home closing revenues reached $1.3 billion, with a home closing gross margin of 22%. Diluted EPS came in at $1.69, up 11% year-over-year, while book value per share increased by 11% and return on equity stood at 14.5% as of March 31, 2025.
CEO Phillippe Lord highlighted the company's ability to balance pace and price despite challenging macro conditions. "We continue to have healthy traffic at our communities," he said. "Our strategy is focused on 60-day closings, 60-day closing-ready commitment, and moving ready inventory has created a differentiator for us by providing certainty to our customers in a highly unpredictable market."
Executive Vice President and CFO Hilla Sferruzza provided a financial overview of the quarter, emphasizing Meritage Homes' focus on delivering long-term value. "Given the current macro volatility," she said, "our daily discipline ensures that we are not overacting to short-term market fluctuations and preserve the long-term value of our land book."
The company's strategy has enabled it to navigate the uncertain times, with a focus on optimizing returns and preserving the value of its land book. As the housing market continues to evolve, Meritage Homes remains committed to providing certainty to its customers through its strategic pivot and innovative approach.
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