Meritage Homes Corporation (MTH) reported its sales results for the first two months of its fiscal third quarter 2011. The company sold 590 homes during July and August as compared with 479 homes sold during the corresponding period in 2010. Individually, Meritage sold 320 homes in July 2011, up 39% year over year, and 270 homes in August 2011, up 8% year over year.
A depressed housing industry is the biggest concern for any homebuilder. To add to the woes, there is no sign of a speedy recovery. Home sales and home prices dropped continuously, owing to an excess supply of homes in the backdrop of depressed demand and tough competition from pre-owned homes. Thus, in the face of such weakness, Meritage’s improvement over last year is worth mentioning.
Scottsdale, Arizona-based Meritage Homes builds single-family homes that appeal to a broad range of homebuyers: first-time and move-up homebuyers in Texas; first-time, move-up, luxury and affordable age-restricted buyers in Arizona; and move-up buyers in California, Nevada, and Florida. The company also provides residential financial services including mortgage origination services to its homebuyers.
It has operations across six states — Texas, Arizona, California, Nevada, Florida, and Colorado — and in the metropolitan areas of Austin, Dallas/Fort Worth, Houston, Inland Empire, Las Vegas, Phoenix, Sacramento, San Antonio, San Francisco Bay Area, Scottsdale and Tucson, Denver, and most recently Orlando, Fort Myers, and Naples.
In the last reported quarter, Meritage posted an adjusted income of $1.15 million or 4 cents per share compared with $7.87 million or 24 cents per share recorded in the earlier-year quarter. Total revenue plummeted 24.5% year over year to $220.1 million, driven by poor home closings during the quarter.
During the quarter, the number of shuttered homes stood at 856 compared with 1,207 in the second quarter of 2010. Net sales orders, however, inched up to 910 units from last year’s 900 units, mainly due to lower cancellation rates. Cancellation rate in the quarter was 15% of gross orders versus 20% in the prior-year quarter.
