Meritage Homes Corporation: Lack Of Bullish Data Points To Upgrade To Buy

Meritage Homes (MTH) remains rated Hold due to persistent weak demand and declining absorption, despite management's efforts on inventory control and the quick-close model. MTH's Q1 2026 saw home closing revenue fall 17% y/y, gross margin drop 450 bps to 17.5%, and net earnings decline 55% y/y. Incentive usage remains elevated, margins are pressured by higher lot costs, and order value fell 10% y/y despite a 17% increase in community count.