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[10-Q] Meritage Homes CORP Quarterly Earnings Report

Filing Impact
(Neutral)
Filing Sentiment
(Neutral)
Form Type
10-Q
Rhea-AI Filing Summary

Meritage Homes (MTH) reported Q3 2025 results for the quarter ended September 30, 2025. Home closing revenue was $1,399,335,000 versus $1,585,784,000 a year ago, and net earnings were $99,297,000 versus $195,966,000. Diluted EPS was $1.39 compared to $2.67 in Q3 2024. Total closing gross profit was $267,149,000, down from $393,245,000.

Cash and cash equivalents were $728,937,000, and real estate inventory totaled $6,140,687,000. The company issued $500,000,000 of 5.650% notes due 2035, lifting senior and convertible notes, net, to $1,803,167,000. The $910,000,000 revolving credit facility was extended to July 9, 2030 and remained undrawn with $825,900,000 available after letters of credit. Year-to-date, operating cash flow used was $125,385,000, financing provided $243,808,000, share repurchases were $145,000,000, and dividends paid were $91,759,000.

The quarter included real estate and land impairments of $9,292,000 and write-offs of terminated land deal deposits of $5,799,000. Shares outstanding were 70,406,707 as of October 27, 2025, adjusted for the 2-for-1 split effective January 2, 2025. The company reported 334 actively selling communities.

Positive
  • None.
Negative
  • None.

Insights

Q3 profitability and closings softened; liquidity and credit headroom remain strong.

Meritage Homes saw year-over-year declines in key earnings metrics. Home closing revenue fell to $1.399B from $1.586B, and diluted EPS decreased to $1.39 from $2.67. Gross profit on closings was $267.1M versus $393.2M, reflecting lower volume/mix and pricing incentives typical in a slower demand environment.

Balance sheet capacity is notable. Cash was $728.9M, the revolver was undrawn with $825.9M available, and the facility maturity was extended to July 2030. The company issued $500M of 2035 notes, raising senior and convertible notes, net, to $1.803B. Year-to-date operating cash outflow of $125.4M aligns with inventory investment.

Operationally, the quarter included $9.3M of impairments and $5.8M in terminated-land deposit write-offs, while communities active were 334. Subsequent filings may detail order trends and margins by region, which will influence future closings and earnings trajectory.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 FORM 10-Q 
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
or 
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to                
Commission File Number: 001-09977
MTH_Logo_Standard_Horizontal_Tagline_RGB narrow white space.jpg
Meritage Homes Corporation
(Exact Name of Registrant as Specified in its Charter)
Maryland 86-0611231
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
18655 North Claret Drive, Suite 400, Scottsdale, Arizona 85255
(Address of Principal Executive Offices) (Zip Code)
(480) 515-8100
(Registrant’s telephone number, including area code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock $.01 par valueMTHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒ No  ☐
Indicate by a checkmark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerýAccelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by a checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
Common shares outstanding as of October 27, 2025: 70,406,707


MERITAGE HOMES CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2025
TABLE OF CONTENTS
 
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024
3
Unaudited Consolidated Income Statements for the Three and Nine Months Ended September 30, 2025 and 2024
4
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024
5
Notes to Unaudited Consolidated Financial Statements
6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
31
Item 3. Quantitative and Qualitative Disclosures About Market Risk
45
Item 4. Controls and Procedures
45
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
47
Item 1A. Risk Factors
47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
47
Items 3-4. Not Applicable
Item 5. Other Information
48
Item 6. Exhibits
49
SIGNATURES
50
INDEX OF EXHIBITS
50










2





PART I - FINANCIAL INFORMATION

Item 1.        Financial Statements

MERITAGE HOMES CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
 
 September 30, 2025December 31, 2024
Assets
Cash and cash equivalents$728,937 $651,555 
Other receivables321,762 256,282 
Real estate6,140,687 5,728,775 
Deposits on real estate under option or contract198,158 192,405 
Investments in unconsolidated entities45,714 28,735 
Property and equipment, net47,976 47,285 
Deferred tax assets, net47,222 54,524 
Prepaids, other assets and goodwill228,054 203,093 
Total assets$7,758,510 $7,162,654 
Liabilities
Accounts payable$217,875 $212,477 
Accrued liabilities414,717 452,213 
Home sale deposits9,420 20,513 
Loans payable and other borrowings25,811 29,343 
Senior and convertible senior notes, net1,803,167 1,306,535 
Total liabilities2,470,990 2,021,081 
Stockholders’ Equity
Preferred stock, par value $0.01. Authorized 10,000,000 shares; none issued and outstanding at September 30, 2025 and December 31, 2024
— — 
Common stock, par value $0.01. Authorized 125,000,000 shares; 70,406,707 and 71,921,972 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively
704 360 
Additional paid-in capital11,416 143,036 
Retained earnings5,275,400 4,998,177 
Total stockholders’ equity5,287,520 5,141,573 
Total liabilities and stockholders’ equity$7,758,510 $7,162,654 
See accompanying notes to unaudited consolidated financial statements
3


MERITAGE HOMES CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
 
Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
Homebuilding:
Home closing revenue$1,399,335 $1,585,784 $4,357,148 $4,745,618 
Land closing revenue16,068 2,665 39,766 4,970 
Total closing revenue1,415,403 1,588,449 4,396,914 4,750,588 
Cost of home closings(1,132,378)(1,193,219)(3,453,213)(3,535,589)
Cost of land closings(15,876)(1,985)(37,128)(4,283)
Total cost of closings(1,148,254)(1,195,204)(3,490,341)(3,539,872)
Home closing gross profit266,957 392,565 903,935 1,210,029 
Land closing gross profit192 680 2,638 687 
Total closing gross profit267,149 393,245 906,573 1,210,716 
Financial Services:
Revenue8,460 8,070 24,967 22,734 
Expense(4,311)(3,706)(13,159)(10,633)
Earnings/(loss) from financial services unconsolidated entities and other, net331 (1,263)1,846 (4,853)
Financial services profit4,480 3,101 13,654 7,248 
Commissions and other sales costs(99,722)(97,898)(303,272)(304,113)
General and administrative expenses(51,787)(59,198)(163,967)(163,114)
Interest expense— — — — 
Other income, net8,128 10,682 28,479 31,202 
Loss on early extinguishment of debt— — — (631)
Earnings before income taxes128,248 249,932 481,467 781,308 
Provision for income taxes(28,951)(53,966)(112,485)(167,771)
Net earnings$99,297 $195,966 $368,982 $613,537 
Earnings per common share: (1)
Basic$1.40 $2.70 $5.17 $8.45 
Diluted$1.39 $2.67 $5.13 $8.36 
Weighted average number of shares: (1)
Basic70,680 72,452 71,346 72,572 
Diluted71,188 73,338 71,879 73,402 

(1) Share and per share amounts have been retroactively adjusted to reflect the 2-for-1 stock split that was effective on January 2, 2025. See Note 1.
See accompanying notes to unaudited consolidated financial statements


4


MERITAGE HOMES CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
 Nine Months Ended September 30,
 20252024
Cash flows from operating activities:
Net earnings$368,982 $613,537 
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization18,603 19,358 
Real estate and land impairments9,292 — 
Stock-based compensation14,780 19,305 
Loss on early extinguishment of debt— 631 
Equity in earnings from unconsolidated entities (3,133)(3,925)
Distributions of earnings from unconsolidated entities3,732 4,005 
Other18,852 15,093 
Changes in assets and liabilities:
Increase in real estate(413,224)(723,835)
Increase in deposits on real estate under option or contract(9,010)(96,404)
(Increase)/decrease in other receivables, prepaids and other assets(77,840)7,307 
(Decrease)/increase in accounts payable and accrued liabilities(45,326)21,387 
Decrease in home sale deposits(11,093)(4,472)
Net cash used in operating activities(125,385)(128,013)
Cash flows from investing activities:
Investments in unconsolidated entities(21,080)(10,442)
Purchases of property and equipment(20,145)(21,174)
Proceeds from sales of property and equipment184 179 
Maturities/sales of investments and securities1,750 750 
Payments to purchase investments and securities(1,750)(750)
Net cash used in investing activities(41,041)(31,437)
Cash flows from financing activities:
Repayment of loans payable and other borrowings(11,522)(7,850)
Repayment of senior notes— (250,695)
Proceeds from issuance of senior and convertible senior notes497,195 575,000 
Payment of debt issuance costs(5,106)(17,332)
Purchase of capped calls related to issuance of convertible senior notes— (61,790)
Dividends paid(91,759)(81,619)
Repurchase of shares(145,000)(85,932)
Net cash provided by financing activities243,808 69,782 
Net increase/(decrease) in cash and cash equivalents77,382 (89,668)
Cash and cash equivalents, beginning of period651,555 921,227 
Cash and cash equivalents, end of period$728,937 $831,559 
See Supplemental Disclosure of Cash Flow Information in Note 13.
See accompanying notes to unaudited consolidated financial statements

5


MERITAGE HOMES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION
Organization. Meritage Homes Corporation ("Meritage Homes") is a leading designer and builder of single-family attached and detached homes. We primarily build in long-term high-growth markets of the United States and offer a variety of entry-level and first move-up homes. We have operations in three regions: West, Central and East, which are comprised of twelve states: Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina. We also operate a financial services segment, which offers title and escrow, mortgage, and insurance services to our homebuyers. Carefree Title Agency, Inc. ("Carefree Title"), our wholly-owned title company, provides title insurance and closing/settlement services to our homebuyers in certain states. Managing our own title operations allows us greater control over the entire escrow and closing cycles in addition to generating additional revenue. Meritage Homes Insurance Agency, Inc. (“Meritage Insurance”), our wholly-owned insurance broker, works in collaboration with insurance companies nationwide to offer homeowners insurance and other insurance products to our homebuyers. Our financial services operation also provides mortgage services to our homebuyers through an unconsolidated joint venture.
We commenced our homebuilding operations in 1985 through our predecessor company, Monterey Homes. Meritage Homes Corporation was incorporated in the state of Maryland in 1988 under the name of Homeplex Mortgage Investments Corporation and merged with Monterey Homes in 1996, at which time our name was changed to Monterey Homes Corporation and later ultimately to Meritage Homes Corporation. Since that time, we have engaged in homebuilding and related activities. Meritage Homes Corporation operates as a holding company and has no independent assets or operations. Meritage Homes' homebuilding construction, development and sales activities are conducted through its subsidiaries. Our homebuilding activities are conducted under the name of Meritage Homes in each of our homebuilding markets. At September 30, 2025, we were actively selling homes in 334 communities, with base prices ranging from approximately $176,000 to $1,020,000.

Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024 ("Annual Report"). The unaudited consolidated financial statements include the accounts of Meritage Homes and those of our consolidated subsidiaries, partnerships and other entities in which we have a controlling financial interest, and of variable interest entities (see Note 3) in which we are deemed the primary beneficiary (collectively, “us”, “we”, “our” and “the Company”). Certain reclassifications have been made to prior year footnotes in the accompanying unaudited consolidated financial statements to conform to classifications used in the current year, including share and per share amounts and reporting segments, as discussed further below. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full fiscal year.
Stock Split. On November 21, 2024, our Board of Directors declared a two-for-one stock split (the "Stock Split") of Meritage’s common stock in the form of a stock dividend. Each stockholder of record at the close of business on December 31, 2024 received one additional share of common stock for each share of common stock held, payable after the close of market on January 2, 2025. Trading began on a split-adjusted basis on January 3, 2025. There was no adjustment to the number of authorized shares or the par value. As required by Accounting Standards Codification ("ASC") 260, Earnings Per Share, all share and per share amounts in the accompanying unaudited consolidated financial statements have been retroactively adjusted to reflect the Stock Split for all periods presented, inclusive of dividends and share repurchases.
Operating and Reporting Segments. Effective January 1, 2025, we realigned our internal organizational structure and resources following continued growth and recent entry into new markets. As a result of the change in our organizational structure, the Tennessee homebuilding operating segment was reclassified from the East reporting segment to the Central reporting segment for the purpose of making operational and resource decisions and assessing financial performance. Prior period balances have been retroactively adjusted to reflect this reclassification.
Cash and Cash Equivalents. Liquid investments with an initial maturity of three months or less are classified as cash equivalents. Amounts in transit from title companies or closing agents for home closings of approximately $57.6 million and $29.0 million are included in Cash and cash equivalents at September 30, 2025 and December 31, 2024, respectively.
6

Real Estate. Real estate inventory is stated at cost unless the community or land is determined to be impaired, at which point the inventory is written down to fair value as required by ASC 360-10, Property, Plant and Equipment (“ASC 360-10”). Real estate inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, and direct overhead costs incurred during development and home construction that benefit the entire community, less impairments, if any. Land and development costs are typically allocated and transferred to homes when home construction begins. Home construction costs are accumulated on a per-home basis, while commissions and other sales costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase. When a home closes, we may have incurred costs for materials and services that have not yet been paid. We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings.
We capitalize qualifying interest to inventory during the development and construction periods. Capitalized interest is included in Cost of closings when the related inventory is closed. Included within our Real estate inventory is land held for development, land held for sale, and mothball communities. Land held for development primarily represents land and development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. Mothball communities represent communities where we have elected to stop development of an existing community because we believe the economic performance of the community would be maximized by deferring development for a period of time to allow market conditions to improve. We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. See Note 2 for additional information related to capitalized interest.
We rely on certain estimates to determine our construction and land development costs. Construction and land costs are comprised of direct and allocated costs, including estimated future costs. In determining these costs, we compile project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. Actual results can differ from budgeted amounts for various reasons, including construction delays, labor or material shortages, sales orders absorption rates that differ from our expectations, increases in costs that have not yet been contracted, changes in governmental requirements, or other unanticipated issues encountered during construction and development and other factors beyond our control, including weather. To address uncertainty in these budgets, we assess, update and revise project budgets on a regular basis, utilizing the most current information available to estimate home construction and land development costs.
Typically, a community's life cycle ranges from three to five years, commencing with the acquisition of the land, continuing through the land development phase, if applicable, and concluding with the construction, sale and closing of the homes. Actual community lives will vary based on the size of the community, the sales orders absorption rates and whether the land purchased was raw, partially-developed or in finished status. Master-planned communities encompassing several phases and super-block land parcels may have significantly longer lives and projects involving smaller finished lot purchases may be significantly shorter.

All of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP.

Existing communities. Community-level reviews are performed quarterly to determine if indicators of potential impairment exist. If indicators of potential impairment exist and the undiscounted cash flows expected to be generated by an asset are lower than its carrying amount, impairment charges are recorded to write down the asset to its estimated fair value. The impairment of a community is allocated across the remaining lots in the community and is recognized in Cost of home closings in the period in which the impairment is determined. The fair value of the community’s assets is determined using either a market-based approach for projects to be sold or a discounted cash flow model for projects we intend to build out. If a market-based approach is used, we determine fair value based on recent comparable purchase and sale activity in the local market, adjusted for variances as determined by our knowledge of the region and general real estate expertise. If a discounted cash flow approach is used, we compute fair value using projections, estimates and observable and unobservable inputs such as (i) home selling prices in the community adjusted for current and expected sales discounts and incentives, (ii) costs related to the community — both land development and home construction — including costs spent to date and budgeted remaining costs to spend, (iii) projected sales absorption rates, reflecting any product mix change strategies implemented to stimulate the orders pace, (iv) expected cancellation rates, (v) alternative land uses including disposition of all or a portion of the land owned, if applicable, and (vi) discount rate, which is currently 10-14% and varies based on the perceived risk inherent in the community’s other cash flow assumptions. These assumptions vary widely across different communities and geographies and are largely dependent on local market conditions. Community-level factors that may impact our key estimates include:
7

•The presence and significance of local competitors, including their offered product type, comparable lot size, remaining lots and competitive actions such as incentive offerings;
•Economic and related demographic conditions for the surrounding community;
•Desirability of the particular community, including unique amenities or other favorable or unfavorable attributes; and
•Existing home inventory supplies for the surrounding community.

These local circumstances may significantly impact our assumptions and the resulting computation of fair value and are, therefore, closely evaluated by our division personnel in their preparation of the discounted cash flow models. The models are also evaluated by regional and corporate personnel for consistency and integration, as decisions that affect pricing or absorption at one community may have resulting consequences for neighboring communities.

Mothball communities. In certain cases, we may elect to stop development of an existing actively selling community (mothball) if we believe the economic performance of the community would be maximized by deferring development for a period of time to allow market conditions to improve. The decision may be based on financial and/or operational metrics. If we decide to mothball a community, we will impair it to its fair value, if applicable, as discussed above and then cease future development activity until such a time when management believes that market conditions have improved and economic performance will be maximized. Impairment charges, if any, are recognized in Cost of home closings in the period in which the impairment is determined. No costs are capitalized to communities that are designated as mothballed. When a community is initially placed into mothball status, it is management’s belief that the community is affected by local market conditions that are expected to improve within the next 1-5 years. Therefore, a temporary postponement of construction and development work is expected to yield better overall returns. Mothballed communities are reviewed at least annually to determine if they are at risk of future impairment. The financial and operational status and expectations of these communities are analyzed as well as any unique attributes that could be viewed as indicators for future impairments. Adjustments are made accordingly and incremental impairments, if any, are recorded at each re-evaluation.

Land held for sale or future development. Land held for sale or future development is reviewed at least annually to determine if it is at risk of future impairment. For land held for sale, our assessments typically involve third-party valuations, such as broker opinions, and recent comparable land sales in the area. For land held for future development, our assessments typically include highly subjective estimates for future performance, including the timing of development, the product to be offered, orders rates and selling prices of the product when the community is anticipated to open for sales, and the projected costs to develop and construct the community. We evaluate various factors to develop our forecasts, including the availability of and demand for homes and finished lots within the surrounding community, historical, current and future sales trends, and third-party data, if available. Based on these factors, we reach conclusions for future performance based on our judgment. If land held for sale or future development is deemed to be impaired, impairment changes are recognized in the period in which the impairment is determined. Impairments on land held for sale are recognized in Cost of land closings and impairments on land held for future development are recognized in Cost of home closings.

See Note 2 for additional information related to Real estate.
Deposits. Deposits paid related to land option and purchase contracts are recorded and classified as Deposits on real estate under option or contract until the related land is purchased. Deposits are reclassified as a component of Real estate at the time the deposit is used to offset the acquisition price of the land based on the terms of the underlying agreements. To the extent they are non-refundable, deposits are expensed to Cost of home closings if the land acquisition is terminated or no longer considered probable. Since our acquisition contracts typically do not require specific performance, we do not consider such contracts to be contractual obligations to purchase the land and our total exposure under such contracts is limited to the loss of any non-refundable deposits and any related capitalized costs. Our Deposits on real estate under option or contract were $198.2 million and $192.4 million as of September 30, 2025 and December 31, 2024, respectively. See Note 3 for additional information related to Deposits on real estate under option or contract.
Goodwill. In accordance with ASC 350, Intangibles, Goodwill and Other ("ASC 350"), we analyze goodwill on an annual basis (or whenever indication of impairment exists) through a qualitative assessment to determine whether it is necessary to perform a goodwill impairment test. ASC 350 states that an entity may first assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test. Such qualitative factors include: (1) macroeconomic conditions, such as a deterioration in general economic conditions, (2) industry and market considerations such as deterioration in the environment in which the entity operates, (3) cost factors such as increases in raw materials, labor costs, etc., and (4) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings. If the qualitative analysis determines that additional impairment testing is required, a two-step impairment test in accordance with ASC 350 would be initiated. We continually evaluate our qualitative inputs to assess whether events and circumstances have occurred that indicate the goodwill balance may not be recoverable. See Note 9 for additional information on our goodwill assets.
8

Leases. We lease certain office space and equipment for use in our operations. We assess each of these contracts to determine whether the arrangement contains a lease as defined by ASC 842, Leases ("ASC 842"). In order to meet the definition of a lease under ASC 842, the contractual arrangement must convey to us the right to control the use of an identifiable asset for a period of time in exchange for consideration. Leases that meet the criteria of ASC 842 are recorded on our balance sheets as right-of-use ("ROU") assets and lease liabilities. ROU assets are classified within Prepaids, other assets and goodwill on the accompanying unaudited consolidated balance sheets, while lease liabilities are classified within Accrued liabilities on the accompanying unaudited consolidated balance sheets.
The table below outlines our ROU assets and lease liabilities (in thousands):
As of
September 30, 2025December 31, 2024
ROU assets$58,800 $52,941 
Lease liabilities61,981 55,825 
Off-Balance Sheet Arrangements - Joint Ventures. We participate in land development joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital. See Note 4 for additional discussion of our investments in unconsolidated entities.
Off-Balance Sheet Arrangements - Other. In the normal course of business, we may acquire lots from various development entities pursuant to purchase and option agreements. The purchase price generally approximates the market price at the date the contract is executed (with possible future escalators) and the acquisition of the land is typically staggered. See Note 3 for additional information on these off-balance sheet arrangements.
Surety Bonds and Letters of Credit. We provide surety bonds and letters of credit in support of our obligations relating to the development of our projects and other corporate purposes in lieu of cash deposits. The amount of these obligations outstanding at any time varies depending on the stage and level of our development activities. Surety bonds are generally not wholly released until all development activities under the bond are complete. In the event a bond or letter of credit is drawn upon, we would be obligated to reimburse the issuer for any amounts advanced under the bond or letter of credit. We believe it is unlikely that any significant amounts of these bonds or letters of credit will be drawn upon.
The table below outlines our surety bond and letter of credit obligations (in thousands):
As of
 September 30, 2025December 31, 2024
 OutstandingEstimated work
remaining to
complete		OutstandingEstimated work
remaining to
complete
Sureties:
Sureties related to owned projects and lots under contract$996,463 $657,238 $1,056,529 $712,415 
Total Sureties$996,463 $657,238 $1,056,529 $712,415 
Letters of Credit (“LOCs”):
LOCs for land development79,116 N/A105,371 N/A
LOCs for general corporate operations5,000 N/A5,000 N/A
Total LOCs$84,116 N/A$110,371 N/A

9

Accrued Liabilities. Accrued liabilities at September 30, 2025 and December 31, 2024 consisted of the following (in thousands):
As of
 September 30, 2025December 31, 2024
Accruals related to real estate development and construction activities$171,107 $167,075 
Payroll and other benefits92,624 131,733 
Accrued interest18,331 6,290 
Accrued taxes14,646 24,478 
Warranty reserves32,372 32,693 
Lease liabilities61,981 55,825 
Other accruals23,656 34,119 
Total$414,717 $452,213 

Warranty Reserves. We provide home purchasers with limited warranties against certain building defects and we have certain obligations related to those post-construction warranties for closed homes. The specific terms and conditions of these limited warranties vary by state, but overall the nature of the warranties include a complete workmanship and materials warranty for the first year after the close of the home, a major mechanical warranty for two years after the close of the home and a structural warranty that typically extends up to 10 years after the close of the home. With the assistance of an actuary, we have estimated these reserves for the structural warranty based on the number of homes still under warranty and historical data and trends for our geographies. We may use industry data with respect to similar product types and geographic areas in markets where our experience is incomplete to draw a meaningful conclusion. We regularly review our warranty reserves and adjust them, as necessary, to reflect changes in trends as information becomes available. Based on such reviews of warranty costs incurred, we did not adjust the warranty reserve balance in the three or nine months ended September 30, 2025 or 2024. Included in the warranty reserve balances at September 30, 2025 and December 31, 2024 are case-specific warranty reserves, as discussed in Note 15.
A summary of changes in our warranty reserves follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
Balance, beginning of period$35,556 $34,769 $32,693 $37,360 
Additions to reserve from new home deliveries4,406 5,831 14,152 16,473 
Warranty claims, net of recoveries(7,590)(5,249)(14,473)(18,482)
Adjustments to pre-existing reserves— — — — 
Balance, end of period$32,372 $35,351 $32,372 $35,351 
Warranty reserves are included in Accrued liabilities on the accompanying unaudited consolidated balance sheets, and additions and adjustments to the reserves are included in Cost of home closings within the accompanying unaudited consolidated income statements. These reserves are intended to cover costs associated with our contractual and statutory warranty obligations, which include, among other items, claims involving defective workmanship and materials. We believe that our total reserves, coupled with our contractual relationships and rights with our trades and the insurance we and our trades maintain, are sufficient to cover our general warranty obligations. However, unanticipated changes in regulatory, legislative, weather, environmental or other conditions could have an impact on our actual warranty costs, and future costs could differ significantly from our estimates.
Revenue Recognition. In accordance with ASC 606, Revenue from Contracts with Customers, we apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract with our customer; (2) identify the performance obligation(s) in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy the performance obligations. Our three sources of revenue are disaggregated by type in the accompanying unaudited consolidated income statements. The performance obligations and subsequent revenue recognition for our three sources of revenue are outlined below:
•Revenue from home closings is recognized when closings have occurred, the risks and rewards of ownership are transferred to the buyer, and we have no continuing involvement with the property, which is generally upon the close of escrow. Revenue is reported net of any discounts and incentives.
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•Revenue from land closings is recognized when a significant down payment is received, title passes, and collectability of the receivable, if any, is reasonably assured, and we have no continuing involvement with the property, which is generally upon the close of escrow.
•Revenue from financial services is recognized when closings have occurred and all financial services have been rendered, which is generally upon the close of escrow.
Home closing and land closing revenue expected to be recognized in any future year related to remaining performance obligations (if any) and the associated contract liabilities expected to be recognized as revenue, excluding revenue pertaining to contracts that have an original expected duration of one year or less, are not material. Revenue from financial services includes estimated future insurance policy renewal commissions as our performance obligations are satisfied upon issuance of the initial policy with a third party broker. The related contract assets for these estimated future renewal commissions are not material at September 30, 2025 and December 31, 2024.
Recent Accounting Pronouncements.
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which aligns interim segment disclosure requirements with existing annual requirements and includes updates to segment reporting, most notably through enhanced disclosures about significant segment expenses and the Chief Operating Decision Maker ("CODM"). We adopted ASU 2023-07 for the annual period beginning January 1, 2024, and for interim periods beginning January 1, 2025. ASU 2023-07 is applied retrospectively to all prior periods presented in the accompanying unaudited consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which modifies the disclosure requirements primarily related to the effective tax rate reconciliation and income taxes paid by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for our annual report covering the fiscal year beginning January 1, 2025 and may be applied either retrospectively or prospectively. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. ASU 2024-03 is effective for our annual report covering the fiscal year beginning January 1, 2027, and for our interim reports beginning January 1, 2028. We are currently evaluating the impact adopting this guidance will have on our financial statement disclosures.

In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments ("ASU 2024-04"), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. We adopted ASU 2024-04 on January 1, 2025 on a prospective basis and will apply the amendments to any future settlements of convertible debt instruments, if applicable. The adoption of ASU 2024-04 did not have any impact on the accompanying unaudited consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"), which modernizes the accounting for the costs of internal-use software by removing all references to software development project stages so that the guidance is neutral to different software development methods. ASU 2025-06 is effective for our annual and interim reports covering the fiscal year beginning January 1, 2028, and may be applied on a retrospective, modified transition or prospective basis. We are currently evaluating the impact adopting this guidance will have on our consolidated financial statements.
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NOTE 2 — REAL ESTATE AND CAPITALIZED INTEREST
Real estate consists of the following (in thousands):
As of
September 30, 2025December 31, 2024
Homes completed and under construction (1)
$2,341,730 $2,375,639 
Finished home sites and home sites under development (2)
3,798,957 3,353,136 
Total$6,140,687 $5,728,775 

(1)Includes the allocated land and land development costs associated with each lot for sold and unsold homes.
(2)Includes raw land, land held for development, land held for sale and communities in mothball status, less impairments, if any. Land held for development, land held for sale and communities in mothball status totaled $118.5 million and $62.7 million as of September 30, 2025 and December 31, 2024, respectively. We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.
Subject to sufficient qualifying assets, we capitalize our development period interest costs incurred to applicable qualifying assets in connection with our real estate development and construction activities. Capitalized interest is allocated to active Real estate when incurred and charged to Cost of closings when the related property is delivered. A summary of our capitalized interest is as follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
Capitalized interest, beginning of period$63,814 $54,327 $53,678 $54,516 
Interest incurred20,050 12,752 54,759 40,004 
Interest expensed— — — — 
Interest amortized to cost of home and land closings(12,663)(13,348)(37,236)(40,789)
Capitalized interest, end of period$71,201 $53,731 $71,201 $53,731 
As discussed in Note 1, and in accordance with ASC 360-10, all of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP. Due to the current economic environment, we evaluated our Real estate assets during the three months ended September 30, 2025. Based on these reviews, we recorded the following impairment charges during the three and nine months ended September 30, 2025 (in thousands). There were no impairment charges recorded during the three and nine months ended September 30, 2024.
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Three Months Ended September 30,Nine Months Ended September 30,
 20252025
Real estate inventory impairments:
West$543 $543 
Central1,243 1,243 
East$6,907 $6,907 
Total$8,693 $8,693 
Impairments of land held for sale:
West— $— 
Central— — 
East599 $599 
Total$599 $599 
Total impairments:
West543 543 
Central1,243 1,243 
East7,506 7,506 
Total$9,292 $9,292 

As discussed in Note 1, non-refundable deposits are expensed to Cost of home closings when a land acquisition is terminated or no longer considered probable. The following tables summarizes the write-offs of non-refundable deposits and associated pre-acquisitions costs for terminated land deals during the periods presented (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
Terminated option/purchase contracts and related pre-acquisition costs:
West$2,544 $976 $3,667 $2,182 
Central104 474 663 623 
East$3,151 572 $7,107 1,126 
Total$5,799 $2,022 $11,437 $3,931 


NOTE 3 — VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED
We enter into purchase and option agreements for land or lots as part of the normal course of business. These purchase and option agreements enable us to acquire properties at one or multiple future dates at pre-determined prices. We believe these acquisition structures allow us to better leverage our balance sheet and reduce our financial risk associated with land acquisitions. In accordance with ASC 810, Consolidation, we evaluate all purchase and option agreements for land to determine whether they are a variable interest entity ("VIE"), and if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are the primary beneficiary we are required to consolidate the VIE in our financial statements and reflect its assets and liabilities as Real estate not owned and Liabilities related to real estate not owned, respectively. We determined that as of September 30, 2025 and December 31, 2024, we were not the primary beneficiary of any VIEs from which we have acquired rights to land or lots under option contracts.
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The table below presents a summary of our lots under option at September 30, 2025 (dollars in thousands): 
Projected Number
of Lots
Purchase
Price		Option/
Earnest  Money
Deposits–Cash
Purchase and option contracts recorded on balance sheet as Real estate not owned— $— $— 
Option contracts — non-refundable deposits, committed (1)
10,881 970,742 115,217 
Purchase contracts — non-refundable deposits, committed (1)
13,235 549,811 71,710 
Purchase and option contracts —refundable deposits, committed1,098 14,877 1,100 
Total committed 25,214 1,535,430 188,027 
Purchase and option contracts — refundable deposits, uncommitted (2)
20,958 1,197,816 10,131 
Total lots under contract or option46,172 $2,733,246 $198,158 
Total purchase and option contracts not recorded on balance sheet (3)
46,172 $2,733,246 $198,158 (4)
 
(1)Deposits are non-refundable except if certain contractual conditions are not performed by the selling party.
(2)Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots.
(3)Except for our specific performance contracts recorded on the accompanying unaudited consolidated balance sheets as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots.
(4)Amount is reflected on the accompanying unaudited consolidated balance sheets in Deposits on real estate under option or contract as of September 30, 2025.
Generally, our options to purchase lots remain effective so long as we purchase a pre-established minimum number of lots on a pre-determined schedule in accordance with each respective agreement. Although the pre-established number is typically structured to approximate our expected rate of home construction starts, during a weakened homebuilding market, we may purchase lots at an absorption level that exceeds our expected orders and home starts pace to meet the pre-established minimum number of lots or restructure our original contract to terms that more accurately reflect our revised orders pace expectations. During a strong homebuilding market, we may accelerate our pre-established minimum purchases if allowed by the contract.

NOTE 4 - INVESTMENTS IN UNCONSOLIDATED ENTITIES
We may enter into joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital. Our joint venture partners generally are other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. Based on the structure of these joint ventures, they may or may not be consolidated into our results.
The primary activity of our land joint ventures is the development and sale of lots to joint venture partners and/or unrelated builders. Our mortgage joint venture is engaged in mortgage activities and primarily provides mortgage services to our homebuyers. As of September 30, 2025, we had three active equity-method land joint ventures and one mortgage joint venture.
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Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands):
As of
September 30, 2025December 31, 2024
Assets:
Cash
$16,559 $4,434 
Real estate
127,658 66,443 
Other assets
5,810 7,286 
Total assets$150,027 $78,163 
Liabilities and equity:
Accounts payable and other liabilities$8,131 $7,148 
Equity of:
Meritage (1)
45,740 27,735 
Other96,156 43,280 
Total liabilities and equity$150,027 $78,163 
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
Revenue$23,002 $12,469 $47,555 $35,798 
Costs and expenses(10,005)(10,352)(31,491)(29,940)
Net earnings of unconsolidated entities$12,997 $2,117 $16,064 $5,858 
Meritage’s share of pre-tax earnings (1) (2)
$969 $1,298 $3,133 $3,925 

(1)Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in the accompanying unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.
(2)Our share of pre-tax earnings from our mortgage joint venture is recorded in Earnings/(loss) from financial services unconsolidated entities and other, net on the accompanying unaudited consolidated income statements. Our share of pre-tax earnings from all other joint ventures is recorded in Other income, net on the accompanying unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer.

NOTE 5 — LOANS PAYABLE AND OTHER BORROWINGS
Loans payable and other borrowings consist of the following (in thousands):
As of
September 30, 2025December 31, 2024
Other borrowings, secured real estate notes payable (1)
$25,811 $29,343 
$910.0 million unsecured revolving credit facility
— — 
Total$25,811 $29,343 
(1)Reflects balance of non-recourse notes payable in connection with land purchases.
The Company entered into an amended and restated unsecured revolving credit facility agreement ("Credit Facility") in 2014 that has been amended from time to time. On July 9, 2025, we entered into the Eleventh Amendment to Amended and Restated Credit Agreement, which extends the maturity date from June 12, 2029 to July 9, 2030. The Credit Facility's aggregate commitment is $910.0 million with an accordion feature permitting the size of the facility to increase to a maximum of $1.4
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billion, subject to certain conditions, including the availability of additional bank commitments. Borrowings under the Credit Facility bear interest at the Company's option, at either (1) term Secured Overnight Financing Rate ("SOFR") (based on 1, 3, or 6 month interest periods, as selected by the Company) plus a 10 basis point adjustment plus an applicable margin (ranging from 110 basis points to 175 basis points (the "applicable margin")) based on the Company's leverage ratio as determined in accordance with a pricing grid, (2) the higher of (i) the prime lending rate ("Prime"), (ii) an overnight bank rate plus 50 basis points and (iii) term SOFR (based on a 1 month interest period) plus a 10 basis point adjustment plus 1%, in each case plus a margin ranging from 10 basis points to 75 basis points based on the Company's leverage in accordance with a pricing grid, or (3) daily simple SOFR plus a 10 basis point adjustment plus the applicable margin. At September 30, 2025, the interest rate on outstanding borrowings under the Credit Facility would have been 5.329% per annum, calculated in accordance with option (1) noted above and using the 1-month term SOFR. We are obligated to pay a fee on the undrawn portion of the Credit Facility at a rate determined by a tiered fee matrix based on our leverage ratio.
The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $3.3 billion (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60%. We were in compliance with all Credit Facility covenants as of September 30, 2025.
We had no outstanding borrowings under the Credit Facility as of September 30, 2025 and December 31, 2024. There were no borrowings or repayments under the Credit Facility during the three months ended September 30, 2025, and $5.0 million of borrowings and repayments under the Credit Facility during the nine months ended September 30, 2025. There were no borrowings or repayments under the Credit Facility during the three and nine months ended September 30, 2024. As of September 30, 2025, we had outstanding letters of credit issued under the Credit Facility totaling $84.1 million, leaving $825.9 million available under the Credit Facility to be drawn.

NOTE 6 — SENIOR AND CONVERTIBLE SENIOR NOTES, NET
Senior and convertible senior notes, net consist of the following (in thousands):
As of
September 30, 2025December 31, 2024
5.125% senior notes due 2027 ("2027 Notes")
300,000 300,000 
1.750% convertible senior notes due 2028 ("2028 Convertible Notes")
575,000 575,000 
3.875% senior notes due 2029 ("2029 Notes")
450,000 450,000 
5.650% senior notes due 2035 ("2035 Notes"). At September 30, 2025, there was $2,642 in net unamortized discount.
497,358 — 
Net debt issuance costs(19,191)(18,465)
Total$1,803,167 $1,306,535 
The indentures for our 2027 Notes, 2029 Notes and 2035 Notes contain covenants that place limits on secured debt and sale and leaseback transactions. We were in compliance with all such covenants as of September 30, 2025.
Obligations to pay principal and interest on the senior and convertible senior notes are guaranteed by substantially all of our wholly-owned subsidiaries (each a “Guarantor” and, collectively, the “Guarantor Subsidiaries”), each of which is directly or indirectly 100% owned by Meritage Homes. Such guarantees are full and unconditional, and joint and several. In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the equity interests of any Guarantor then held by Meritage and its subsidiaries, then that Guarantor may be released and relieved of any obligations under its note guarantee. There are no significant restrictions on our ability or the ability of any Guarantor to obtain funds from their respective subsidiaries, as applicable, by dividend or loan. We do not provide separate financial statements of the Guarantor Subsidiaries because Meritage Homes (the parent company) has no independent assets or operations and the guarantees are full and unconditional and joint and several. Subsidiaries of Meritage Homes Corporation that are non-guarantor subsidiaries are, individually and in the aggregate, minor, and accordingly, the assets, liabilities and results of operations of Meritage Homes Corporation and the Guarantor Subsidiaries are not materially different than the corresponding amounts presented in the unaudited consolidated financial statements of Meritage Homes.
In March 2025, we completed an offering of $500.0 million aggregate principal amount of 5.650% 2035 Notes. The 2035 Notes were issued at a discount of 99.439% of the principal amount and the net proceeds are intended to be used for general corporate purposes.
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2028 Convertible Notes

In May 2024, we issued $575.0 million aggregate principal amount of 1.750% 2028 Convertible Notes. The 2028 Convertible Notes were issued at par and will mature on May 15, 2028, unless converted earlier in accordance with their terms prior to such date. We used a portion of the net proceeds from the offering to pay the cost of entering into the Capped Calls, as defined and described below, and to redeem all $250.0 million aggregate principal then outstanding of our 6.00% Senior Notes due 2025 for which we incurred $0.6 million in early debt extinguishment charges in the nine months ended September 30, 2024, reflected as Loss on early extinguishment of debt in the accompanying unaudited consolidated income statements.

The 2028 Convertible Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 8.6096 shares of common stock per $1,000 principal amount of the 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $116.15 per share and is subject to adjustment in certain circumstances. In addition, we must provide additional shares upon conversion if there is a "Make-Whole Fundamental Change". The Company is required to satisfy its conversion obligations by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election.

Prior to February 15, 2028, the holders of the 2028 Convertible Notes may convert their notes only upon satisfaction of certain circumstances. During the three and nine months ended September 30, 2025, the circumstances allowing holders of the 2028 Convertible Notes to convert were not met. On or after February 15, 2028, until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes, holders may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.

For additional details related to our 2028 Convertible Notes and Capped Calls, see Note 7 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Capped Call Transactions

Concurrent with the offering of the 2028 Convertible Notes, we used a portion of the net proceeds to enter into privately negotiated capped call transactions (the "Capped Calls”) which require the Capped Calls counterparties (the "Counterparties") to provide shares of our common stock to converting debt holders up to a cap price. The Capped Calls each have an initial strike price of approximately $116.15 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2028 Convertible Notes. The Capped Calls have initial cap prices of $175.32 per share, subject to certain adjustments. The Capped Calls will reduce our obligation to settle, in shares or in cash, conversions when our stock price is between $116.15 and $175.32.

The Capped Calls are separate transactions entered into by the Company with each of the Counterparties, are not part of the terms of the 2028 Convertible Notes and do not change the note holders’ rights under the 2028 Convertible Notes or the indenture governing the 2028 Convertible Notes. Holders of the 2028 Convertible Notes do not have any rights with respect to the Capped Calls.

As the Capped Calls are considered indexed to the Company's own stock, they are recorded in stockholders’ equity as a reduction of Additional paid-in capital in the accompanying unaudited consolidated balance sheets, and are not accounted for as derivatives under ASC 815-10, Derivatives and Hedging.

NOTE 7 — FAIR VALUE DISCLOSURES
ASC 820-10, Fair Value Measurement ("ASC 820"), defines fair value, establishes a framework for measuring fair value and addresses required disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing management’s estimates, assumptions and specific knowledge of the assets/liabilities and related markets. The three levels are defined as follows:
•Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.
•Level 2 — Valuation is determined from quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market.
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•Level 3 — Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on the Company’s own estimates about the assumptions that market participants would use to value the asset or liability.
If the only observable inputs are from inactive markets or for transactions which the Company evaluates as “distressed”, the use of Level 1 inputs should be modified by the Company to properly address these factors, or the reliance of such inputs may be limited, with a greater weight attributed to Level 3 inputs.
Financial Instruments: The fair value of our fixed-rate debt is derived from quoted market prices by independent dealers (Level 2 inputs as per the discussion above) and is as follows (in thousands):
As of
 September 30, 2025December 31, 2024
 Aggregate
Principal		Estimated  Fair
Value		Aggregate
Principal		Estimated  Fair
Value
5.125% 2027 Notes
$300,000 $302,250 $300,000 $300,330 
1.750% 2028 Convertible Notes
$575,000 $588,225 $575,000 $563,259 
3.875% 2029 Notes
$450,000 $437,625 $450,000 $420,795 
5.650% 2035 Notes
$500,000 $509,400 $— $— 
Other financial assets and liabilities, including our Loans payable and other borrowings, are generally shorter term in nature and the longer term balances are not material to our consolidated balance sheets. Therefore, we consider the carrying amounts of our other financial assets and liabilities to approximate fair value.
Non-Financial Instruments: Our Real estate assets are Level 3 instruments that are required to be recorded at fair value only if events and circumstances indicate that the carrying value may not be recoverable. The fair value of inventories that were measured as of September 30, 2025 was $392.4 million. See Note 1 for information on the significant observable and unobservable inputs we utilized in our fair value measurements with respect to the real estate assets measured at fair value.



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NOTE 8 — EARNINGS PER SHARE
Basic and diluted earnings per common share were calculated as follows (in thousands, except per share amounts):
 
Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
Basic weighted average number of shares outstanding70,680 72,452 71,346 72,572 
Effect of dilutive securities:
Unvested restricted stock508 886 533 830 
Diluted average shares outstanding71,188 73,338 71,879 73,402 
Net earnings$99,297 $195,966 $368,982 $613,537 
Basic earnings per share$1.40 $2.70 $5.17 $8.45 
Diluted earnings per share$1.39 $2.67 $5.13 $8.36 

We compute basic earnings per share by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to the potential dilution that could occur if securities or contracts to issue common stock that are dilutive were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. In accordance with ASC 260-10, Earnings Per Share, we calculate the dilutive effect of the 2028 Convertible Notes using the "if-converted" method. As discussed in Note 6, the Company will settle any convertible note conversions by paying cash up to the principal amount of notes and settle any additional value in cash, shares of common stock or a combination of cash and shares of common stock, at the Company’s election. As the Company will settle the principal amount of convertible notes in cash upon conversion, the convertible notes only have a dilutive impact when the average share price of the Company’s common stock exceeds the conversion price, in any applicable period.

Share and per share amounts have been retroactively adjusted to reflect the Stock Split that was effective on January 2, 2025. See Note 1.
NOTE 9 — ACQUISITIONS AND GOODWILL
Goodwill. In prior years, we have entered new markets through the acquisition of the homebuilding assets and operations of local/regional homebuilders in Georgia, South Carolina and Tennessee. As a result of these transactions, we recorded approximately $33.0 million of goodwill. Goodwill represents the excess purchase price of our acquisitions over the fair value of the net assets acquired. Our acquisitions were recorded in accordance with ASC 805, Business Combinations, and ASC 820, using the acquisition method of accounting. The purchase price for acquisitions was allocated based on estimated fair value of the assets and liabilities at the date of the acquisition. The combined excess purchase price of our acquisitions over the fair value of the net assets is classified as goodwill and is included on the accompanying unaudited consolidated balance sheets in Prepaids, other assets and goodwill. In accordance with ASC 350, we assess the recoverability of goodwill annually, or more frequently, if impairment indicators are present.
A summary of the carrying amount of goodwill follows (in thousands):
WestCentralEastFinancial ServicesCorporateTotal
Balance at December 31, 2024 (1)
$— $10,247 $22,715 $— $— $32,962 
Additions— — — — — — 
Balance at September 30, 2025$— $10,247 $22,715 $— $— $32,962 

(1) Effective January 1, 2025, the Tennessee homebuilding operating segment has been reclassified from the East reporting segment to the Central reporting segment. See Note 1 for additional information about the reclassification of the Tennessee homebuilding operating segment. Prior period balances have been retroactively adjusted to reflect this reclassification.

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NOTE 10 — STOCKHOLDERS’ EQUITY
A summary of changes in stockholders’ equity is presented below (in thousands):
 Nine Months Ended September 30, 2025
 (In thousands)
 Number of
Shares		Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Total
Balance at December 31, 202471,922 $360 $143,036 $4,998,177 $5,141,573 
Stock Split effective January 2, 2025 (See Note 8)— 360 (360)— — 
Net earnings— — — 122,806 122,806 
Stock-based compensation expense— — 6,325 — 6,325 
Issuance of stock514 5 (5)— — 
Dividends declared— — — (30,887)(30,887)
Share repurchases(605)(7)(45,066)— (45,073)
Balance at March 31, 202571,831 $718 $103,930 $5,090,096 $5,194,744 
Net earnings— — — 146,879 146,879 
Stock-based compensation expense— — 3,597 — 3,597 
Dividends declared— — — (30,597)(30,597)
Share repurchases(674)(6)(45,443)— (45,449)
Balance at June 30, 202571,157 $712 $62,084 $5,206,378 $5,269,174 
Net earnings— — — 99,297 99,297 
Stock-based compensation expense— — 4,858 — 4,858 
Issuance of stock22 — — — — 
Dividends declared— — — (30,275)(30,275)
Share repurchases(772)(8)(55,526)— (55,534)
Balance at September 30, 202570,407 $704 $11,416 $5,275,400 $5,287,520 
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 Nine Months Ended September 30, 2024
 (In thousands)
 
Number of
Shares (1)
Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Total
Balance at December 31, 202372,850 $364 $290,955 $4,320,581 $4,611,900 
Net earnings— — — 186,016 186,016 
Stock-based compensation expense— — 6,114 — 6,114 
Issuance of stock512 3 (3)— — 
Dividends declared— — — (27,239)(27,239)
Share repurchases(724)(4)(56,214)— (56,218)
Balance at March 31, 202472,638 $363 $240,852 $4,479,358 $4,720,573 
Net earnings— — — 231,555 231,555 
Stock-based compensation expense— — 4,718 — 4,718 
Issuance of stock16 — — — — 
Dividends declared— — — (27,245)(27,245)
Capped call transactions, net of tax— — (47,067)— (47,067)
Balance at June 30, 202472,654 363 198,503 4,683,668 4,882,534 
Net earnings— — — 195,966 195,966 
Stock-based compensation expense— — 8,473 — 8,473 
Dividends declared— — — (27,135)(27,135)
Issuance of stock8 — — — — 
Share repurchases(302)(1)(30,047)— (30,048)
Balance at September 30, 202472,360 $362 $176,929 $4,852,499 $5,029,790 
(1) Share amounts have been retroactively adjusted to reflect the Stock Split that was effective on January 2, 2025. See Note 1.
During the three months ended September 30, 2025 and 2024, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $0.43 and $0.375 per share, respectively. Quarterly dividends declared and paid during the nine months ended September 30, 2025 and 2024, totaled $1.29 and $1.125 per share, respectively. During the three and nine months ended September 30, 2025 and 2024, we reflected the applicable excise tax on share repurchases in Additional paid-in capital as part of the cost basis of the stock repurchased and recorded a corresponding liability in Accrued liabilities on the accompanying unaudited consolidated balance sheets.

NOTE 11 — STOCK BASED AND DEFERRED COMPENSATION

We have a stock compensation plan, the Meritage Homes Corporation 2018 Stock Incentive Plan (the “2018 Plan"), that was approved by our Board of Directors and our stockholders and adopted in May 2018. In May 2023, the Board of Directors and stockholders approved an amendment to the 2018 Plan to increase the number of shares available for issuance by 1,600,000. The 2018 Plan is administered by our Board of Directors and allows for the grant of stock appreciation rights, restricted stock awards, restricted stock units, performance share awards and performance-based awards in addition to non-qualified and incentive stock options. All available shares from expired, terminated, or forfeited awards that remained under prior plans were merged into and became available for grant under the 2018 Plan. The 2018 Plan authorizes awards to officers, key employees, non-employee directors and consultants. The 2018 Plan authorizes 14,800,000 shares of stock to be awarded, of which 2,009,685 shares remain available for grant at September 30, 2025. We believe that such awards provide a means of long-term compensation to attract and retain qualified employees and better align the interests of our employees with those of our stockholders. Non-vested stock awards are usually granted with a five-year ratable vesting period for employees, a three-year cliff vesting for both restricted stock units and performance-based awards granted to executive officers and either a three-year cliff vesting or one-year vesting for non-employee directors, dependent on their appointment date.
Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed, less forfeitures, on a straight-line basis over the vesting period of the award. Compensation cost related to
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performance-based restricted stock unit awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718-10-25-20, Compensation – Stock Compensation ("ASC 718"), which requires an assessment of probability of attainment of the performance target(s). As our performance targets are dependent on performance over a specified measurement period, once we determine that a performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense recorded on a straight-line basis through the end of the award vesting period. A portion of the performance-based restricted stock unit awards granted to our executive officers contain market conditions as defined by ASC 718. ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engage a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is expensed straight-line over the service period of the awards. Below is a summary of stock-based compensation expense and stock award activity (dollars in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
Stock-based compensation expense$4,858 $8,473 $14,780 $19,305 
Non-vested shares granted1,000 2,974 321,213 284,304 
Performance-based non-vested shares granted— 4,550 82,907 79,946 
Performance-based shares issued in excess of target shares granted (1)
1,979 — 22,535 31,956 
Restricted stock awards vested (includes performance-based awards)20,600 7,216 513,650 504,452 
(1)Performance-based shares that vested and were issued as a result of performance achievement exceeding the originally established targeted number of shares related to respective performance metrics related to the prior fiscal year performance period.
The following table includes additional information regarding our stock compensation plan (dollars in thousands):
 As of
 September 30, 2025December 31, 2024
Unrecognized stock-based compensation cost$35,161 $30,666 
Weighted average years expense recognition period2.001.95
Total equity awards outstanding (1)
1,005,018 1,256,932 
(1)Includes unvested restricted stock units and performance-based awards (assuming 100%/target payout).
We also offer a non-qualified deferred compensation plan ("Deferred Compensation Plan") to highly compensated employees in order to allow them additional pre-tax income deferrals above and beyond the limits that qualified plans, such as 401(k) plans, impose on highly compensated employees. We do not currently offer a contribution match on the Deferred Compensation Plan. All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the Deferred Compensation Plan for the three and nine months ended September 30, 2025 or 2024, other than minor administrative costs.

NOTE 12 — INCOME TAXES
Components of the provision for income taxes are as follows (in thousands): 
 Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
Federal$25,115 $42,321 $94,244 $132,783 
State3,836 11,645 18,241 34,988 
Total$28,951 $53,966 $112,485 $167,771 

The effective tax rate for the three and nine months ended September 30, 2025 was 22.6% and 23.4%, respectively, and for the three and nine months ended September 30, 2024 was 21.6% and 21.5%, respectively. The increase in the effective tax
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rate for the three and nine months ended September 30, 2025 reflects fewer homes qualifying for the §45L energy-efficient homes federal tax credit under the Internal Revenue Code ("IRC") enacted in the Inflation Reduction Act ("IRA") due to higher construction thresholds required to earn these tax credits beginning in 2025.
At September 30, 2025 and December 31, 2024, we have no unrecognized tax benefits. We believe our current income tax filing positions and deductions will be sustained on audit and we do not anticipate any adjustments that will result in a material change. Our policy is to accrue interest and penalties on unrecognized tax benefits and include them in the provision for income taxes.
We determine our deferred tax assets and liabilities in accordance with ASC 740, Income Taxes. We evaluate our deferred tax assets, including the benefit from net operating losses ("NOLs"), by jurisdiction to determine if a valuation allowance is required. This evaluation considers, among other matters, the nature, frequency and severity of cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, experiences with operating losses and experiences of utilizing tax credit carry forwards and tax planning alternatives. We have no NOLs or credit carryovers, and determined that no valuation allowance on our deferred tax assets is necessary at September 30, 2025.
At September 30, 2025, we had no income taxes payable and $16.2 million income taxes receivable. The income taxes receivable primarily consists of federal and state estimated tax payments and energy tax credits in excess of income tax liability accrued at September 30, 2025. We have accrued income taxes of $11.6 million recorded in Accrued liabilities on the accompanying unaudited consolidated balance sheets at September 30, 2025 that consists primarily of state franchise tax and federal excise tax.

We conduct business and are subject to tax in the U.S. both federally and in several states. With few exceptions, we are no longer subject to U.S. federal, state, or local income tax examinations by taxing authorities for years prior to 2020. We do not have any Federal or state income tax examinations pending resolution at this time.

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (“OBBBA”), which includes several significant corporate tax changes. The legislation modifies or extends provisions originally enacted under the Tax Cuts and Jobs Act of 2017, including but not limited to the reinstatement of immediate expensing for research and development expenditures and the restoration of 100% bonus depreciation for qualified property. In addition, OBBBA introduces new provisions, including the repeal of the §45L energy-efficient home credit for homes acquired after June 30, 2026, and a new 1% floor on charitable contribution deductions. We have incorporated the effective changes into our provision and continue to evaluate the full impact of the legislation. However, we do not expect the legislative changes to have a material effect on our effective tax rate for the year ending December 31, 2025.

NOTE 13 — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
The following table presents certain supplemental cash flow information (in thousands):
Nine Months Ended September 30,
20252024
Cash paid during the year for:
Interest, net of interest capitalized$(17,546)$(14,816)
Income taxes paid, net$131,475 $184,667 
Non-cash operating activities:
Real estate acquired through notes payable$7,990 $3,630 
ROU assets obtained in exchange for new operating lease obligations$12,172 $9,139 
Non-cash investing and financing activities:
Distributions of real estate from unconsolidated joint ventures, net$3,090 $9,315 

NOTE 14 — OPERATING AND REPORTING SEGMENTS
We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting, we have twelve homebuilding operating segments. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer
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services. We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our three reportable homebuilding segments are as follows:
West:
Arizona, California, Colorado and Utah
Central:
Tennessee and Texas
East:
Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina
We define our segments based on the way in which internally reported financial information is regularly provided and reviewed by the CODM to analyze financial performance, make decisions, and allocate resources. Our CODM is the chief executive officer. The CODM’s evaluation of the homebuilding segment performance is based on segment home closing revenue, home closing gross profit and gross margin, total gross profit, commissions and other sales costs, general and administrative expenses incurred by or allocated to each segment, including impairments, and operating income. The CODM uses these performance metrics predominantly in the annual budget and forecasting process and considers budget-to-actual variances on a quarterly basis for these measures when making decisions about the allocation of operating and capital resources to each segment. The CODM also uses these data points to assess the performance of each segment by comparing the results of each segment with one another and in determining the compensation of certain employees. The CODM also reviews financial services profits and losses to evaluate the performance of the financial services segment and make decisions about allocation of resources and financial services related product offerings.
Effective January 1, 2025, we realigned our internal organizational structure and resources following continued growth and recent entry into new markets. As a result of the change in our organizational structure, the Tennessee homebuilding operating segment was reclassified from the East reporting segment to the Central reporting segment for the purpose of making operational and resource decisions and assessing financial performance. Prior period balances have been retroactively adjusted to reflect this reclassification.
Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.
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The following tables provide financial information about our reportable segments and Corporate and other categories (in thousands):
Three Months Ended September 30, 2025
WestCentralEastTotal
Home closing revenue$420,658 $443,086 $535,591 $1,399,335 
Land closing revenue— 1,841 14,227 16,068 
Total closing revenue420,658 444,927 549,818 1,415,403 
Cost of home closings338,211 348,270 445,897 1,132,378 
Cost of land closings— 2,411 13,465 15,876 
Total cost of closings338,211 350,681 459,362 1,148,254 
Home closing gross profit82,447 94,816 89,694 266,957 
Land closing gross (loss)/profit— (570)762 192 
Total closing gross profit82,447 94,246 90,456 267,149 
Home closing gross margin19.6%21.4%16.7%19.1%
Commissions and other sales costs26,387 34,189 39,146 99,722 
General and administrative expenses13,314 11,854 16,536 41,704 
Homebuilding segment operating income42,746 48,203 34,774 125,723 
Financial services segment profit4,480 
Corporate and unallocated costs (1)(10,083)
Interest expense— 
Other income, net8,128 
Earnings before income taxes$128,248 

(1)Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.

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Three Months Ended September 30, 2024
WestCentralEastTotal
Home closing revenue$594,509 $484,739 $506,536 $1,585,784 
Land closing revenue— 2,125 540 2,665 
Total closing revenue594,509 486,864 507,076 1,588,449 
Cost of home closings$456,171 $360,413 $376,635 $1,193,219 
Cost of land closings— 1,480 505 1,985 
Total cost of closings456,171 361,893 377,140 1,195,204 
Home closing gross profit138,338 124,326 129,901 392,565 
Land closing gross profit— 645 35 680 
Total closing gross profit138,338 124,971 129,936 393,245 
Home closing gross margin23.3%25.6%25.6%24.8%
Commissions and other sales costs31,235 33,664 32,999 97,898 
General and administrative expenses13,212 12,658 15,261 41,131 
Homebuilding segment operating income93,891 78,649 81,676 254,216 
Financial services segment profit3,101 
Corporate and unallocated costs (1)(18,067)
Interest expense— 
Other income, net10,682 
Earnings before income taxes$249,932 

(1)Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.


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Nine Months Ended September 30, 2025
WestCentralEastTotal
Home closing revenue$1,449,499 $1,336,048 $1,571,601 $4,357,148 
Land closing revenue691 9,740 29,335 39,766 
Total closing revenue1,450,190 1,345,788 1,600,936 4,396,914 
Cost of home closings1,147,619 1,043,916 1,261,678 3,453,213 
Cost of land closings142 10,439 26,547 37,128 
Total cost of closings1,147,761 1,054,355 1,288,225 3,490,341 
Home closing gross profit301,880 292,132 309,923 903,935 
Land closing gross profit/(loss)549 (699)2,788 2,638 
Total closing gross profit302,429 291,433 312,711 906,573 
Home closing gross margin20.8%21.9%19.7%20.7%
Commissions and other sales costs85,973 102,500 114,799 303,272 
General and administrative expenses39,951 37,236 53,817 131,004 
Homebuilding segment operating income176,505 151,697 144,095 472,297 
Financial services segment profit13,654 
Corporate and unallocated costs (1)(32,963)
Interest expense— 
Other income, net28,479 
Earnings before income taxes$481,467 
(1)Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.

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Nine Months Ended September 30, 2024
WestCentralEastTotal
Home closing revenue$1,732,978 $1,496,889 $1,515,751 $4,745,618 
Land closing revenue— 2,125 2,845 4,970 
Total closing revenue1,732,978 1,499,014 1,518,596 4,750,588 
Cost of home closings1,331,248 1,096,051 1,108,290 3,535,589 
Cost of land closings— 1,480 2,803 4,283 
Total cost of closings1,331,248 1,097,531 1,111,093 3,539,872 
Home closing gross profit401,730 400,838 407,461 1,210,029 
Land closing gross profit— 645 42 687 
Total closing gross profit401,730 401,483 407,503 1,210,716 
Home closing gross margin23.2%26.8%26.9%25.5%
Commissions and other sales costs96,054 105,956 102,103 304,113 
General and administrative expenses39,742 36,292 44,108 120,142 
Homebuilding segment operating income265,934 259,235 261,292 786,461 
Financial services segment profit7,248 
Corporate and unallocated costs (1)(42,972)
Interest expense— 
Other income, net31,202 
Loss on early extinguishment of debt(631)
Earnings before income taxes$781,308 

(1)Balance consists primarily of corporate costs and shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments.

 At September 30, 2025
 WestCentralEastFinancial ServicesCorporate  and
Unallocated		Total
Deposits on real estate under option or contract$26,818 $61,919 $109,421 $— $— $198,158 
Real estate1,830,250 1,775,866 2,534,571 — — 6,140,687 
Investments in unconsolidated entities20,358 24,562 — — 794 45,714 
Other assets53,659 (1)336,898 (2)85,949 (3)2,547 894,898 (4)1,373,951 
Total assets$1,931,085 $2,199,245 $2,729,941 $2,547 $895,692 $7,758,510 

(1)Balance consists primarily of cash and cash equivalents, prepaids and other assets, and property and equipment, net.
(2)Balance consists primarily of cash and cash equivalents, development reimbursements from local municipalities, prepaids and other assets, and goodwill (see Note 9).
(3)Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaids and other assets.
(4)Balance consists primarily of cash and cash equivalents, deferred tax assets, net and prepaids and other assets.
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 At December 31, 2024
 WestCentralEastFinancial ServicesCorporate  and
Unallocated		Total
Deposits on real estate under option or contract$30,179 $32,200 $130,026 $— $— $192,405 
Real estate1,862,792 1,613,735 2,252,248 — — 5,728,775 
Investments in unconsolidated entities9,062 18,816 — — 857 28,735 
Other assets28,251 (1)270,203 (2)91,082 (3)3,049 820,154 (4)1,212,739 
Total assets$1,930,284 $1,934,954 $2,473,356 $3,049 $821,011 $7,162,654 
(1)Balance consists primarily of property and equipment, prepaid expenses and other assets, and development receivables.
(2)Balance consists primarily of development reimbursements from local municipalities, property and equipment, goodwill (see Note 9), and prepaid expenses and other assets.
(3)Balance consists primarily of cash and cash equivalents, goodwill (see Note 9), and prepaids and other assets.
(4)Balance consists primarily of cash and cash equivalents, deferred tax assets, net and prepaids and other assets.

NOTE 15 — COMMITMENTS AND CONTINGENCIES
We are involved in various routine legal and regulatory proceedings, including, without limitation, claims and litigation alleging construction defects. In general, the proceedings are incidental to our business, and most exposure is subject to and should be covered by warranty and indemnity obligations of our consultants and subcontractors. Additionally, some such claims are also covered by insurance. With respect to the majority of pending litigation matters, our ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential material losses related to these matters are not considered probable. Historically, most disputes regarding warranty claims are resolved prior to litigation. We believe there are no pending legal or warranty matters as of September 30, 2025 that could have a material adverse impact upon our consolidated financial condition, results of operations or cash flows that have not been sufficiently reserved.

We have case specific reserves within our $32.4 million of total Warranty reserves related to alleged stucco defects in certain homes we constructed predominantly between 2015 and 2019. Our review and management of these matters is ongoing and our estimate of and reserves for resolving them is based on internal data, historical experience, our judgment and various assumptions and estimates. Due to the degree of judgment and the potential for variability in our underlying assumptions and data, as we obtain additional information, we may revise our estimate and thus our related reserves. As of September 30, 2025, after considering potential recoveries from the consultants and contractors involved and their insurers and the potential recovery under our general liability insurance policies, we did not adjust such reserves and we believe our reserves are sufficient to cover the above mentioned matters. See Note 1 for information related to our warranty obligations.

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Special Note of Caution Regarding Forward-Looking Statements
In passing the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Congress encouraged public companies to make “forward-looking statements” by creating a safe-harbor to protect companies from securities law liability in connection with forward-looking statements. We intend to qualify both our written and oral forward-looking statements for protection under the PSLRA.
The words “believe,” “expect,” “anticipate,” “forecast,” “plan,” “intend,” “may,” “will,” “should,” “could,” “estimate,” "target," and “project” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. All statements we make other than statements of historical fact are forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements in this Quarterly Report may include statements concerning our belief that we have sufficient liquidity; our goals, strategies and strategic initiatives including our 60-day closing ready commitment, our use of interest rate buy-downs and other financing incentives, our partnership with external realtors, and the anticipated benefits relating thereto; our intentions and the expected benefits and advantages of our product and land positioning strategies, including with respect to our focus on the first-time and first move-up home buyer and housing demand for affordable homes; the benefits of and our intentions to use options to acquire land; our positions and our expected outcome relating to litigation and regulatory proceedings in general; our intentions to pay quarterly dividends; the sustainability of our tax positions; that we may repurchase our debt and equity securities; our non-use of derivative financial instruments; expectations regarding our industry and our business for the remainder of 2025 and beyond; the demand for and the pricing of our homes; our land and lot acquisition strategy (including that we will redeploy cash to acquire well-positioned finished lots and that we may participate in joint ventures or opportunities outside of our existing markets if opportunities arise and the benefits relating thereto); that we may expand into new markets; the availability of labor and materials for our operations; that we may seek additional debt or equity capital; our expectation that existing guarantees, letters of credit and performance and surety bonds will not be drawn on; the sufficiency of our insurance coverage and legal and warranty reserves; the outcome of pending litigation; the sources and sufficiency of our capital resources to support our business strategy; the sufficiency of our land pipeline; the impact of new accounting standards and changes in accounting estimates; trends and expectations concerning future demand for homes, home construction cycle times, sales prices, sales incentives, sales orders, cancellations, construction and materials costs and availability, general and administrative costs, mortgage interest rates, gross margins, land costs, inflation, and community counts; our future cash needs and sources; and the impact of seasonality.

Important factors that could cause actual results to differ materially from those in forward-looking statements, and that could negatively affect our business include, but are not limited to, the following: increases in interest rates or decreases in mortgage availability, and the cost and use of rate locks and buy-downs; the cost of materials used to develop communities and construct homes; cancellation rates; supply chain and labor constraints; shortages in the availability and cost of subcontract labor; the ability of our potential buyers to sell their existing homes; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; the adverse effect of slow absorption rates; legislation related to tariffs; impairments of our real estate inventory; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our exposure to counterparty risk with respect to our capped calls; our ability to obtain financing if our credit ratings are downgraded; our exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest money or option deposits; our limited geographic diversification; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure of our employees and representatives to comply with laws and regulations; our compliance with government regulations; liabilities or restrictions resulting from regulations applicable to our financial services operations; negative publicity that affects our reputation; potential disruptions to our business by an epidemic or pandemic, and measures that federal, state and local governments and/or health authorities implement to address it; and other factors identified in documents filed by the Company with the Securities and Exchange Commission ("SEC"), including those set forth in our Form 10-K for the year ended December 31, 2024 and this Quarterly Report on Form 10-Q under the caption "Risk Factors."
Forward-looking statements express expectations of future events. All forward-looking statements are inherently uncertain, as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties that could cause actual events or results to differ materially from those projected. Due to these inherent uncertainties, the investment community is urged not to place undue reliance on forward-looking statements. In addition, we disclaim and undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to projections over time, except as required by law.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview and Outlook

The macroeconomic landscape continued to challenge the homebuilding sector in the third quarter of 2025 due to elevated mortgage interest rates, an increase in the supply of resale inventory and diminished consumer confidence. We were able to navigate these conditions by leaning in to our strategy to more effectively compete with the resale market with a sufficient inventory of affordable, move-in ready homes ready to close within 60 days, and a commitment to partner with third party brokers, who facilitate most residential real estate transactions in the U.S. We believe this strategy allows us to effectively align prospective homebuyers with immediately available homes with a comfortable monthly mortgage payment. Although we expect that mortgage rates will remain volatile and macroeconomic concerns will continue to impact consumer psychology for the near to mid-term, we believe that our interest rate buy-downs, other financing incentives and affordable price points provide us with a competitive advantage, particularly over resale homes as individual home sellers are not typically able to provide such incentives.

In addition to the challenging sales environment, the homebuilding sector continues to experience elevated land costs following several years of historically high land development costs. These elevated land costs are negatively impacting our margins, although we have seen offsetting improvements in margin due to construction cycle times and material costs returning to normalized levels in the third quarter of 2025 after stabilizing in late 2024.
We believe that our strategy has, and will continue to drive strong performance of key financial measures, including home closing volume, home closing gross margin, selling, general and administrative cost leveraging, balance sheet management and long-term community count growth.
Summary Company Results

Home closing volume of 3,685 homes in the three months ended September 30, 2025 was down 6.5% from 3,942 homes in the same prior year period. The lower closing volume combined with a 5.6% decrease in average sales price ("ASP") on closings for $1.4 billion in home closing revenue, an 11.8% decrease from $1.6 billion in the three months ended September 30, 2024. The lower ASP is a result of increased cost and utilization of incentives and geographic mix shift, and contributed to the third quarter 2025 home closing gross margin decline of 570 basis points to 19.1%, compared to 24.8% in the prior year period. The decrease in home closing gross margin was also attributable to real estate-related impairments and charges incurred related to terminated land contracts, higher lot costs, and reduced leverage of fixed costs on lower home closing revenue. These increased costs were partially offset by savings in direct costs, leading to home closing gross profit of $267.0 million in the third quarter 2025 compared to $392.6 million in the prior year period. Land closing gross profit was $0.2 million and $0.7 million in the three months ended September 30, 2025 and 2024, respectively. Financial services profit of $4.5 million in the three months ended September 30, 2025 increased from $3.1 million in the same period of 2024 due to fewer charges in the current period related to the expiration of interest rate forward commitments. Commissions and other sales costs of $99.7 million in the three months ended September 30, 2025 increased $1.8 million due to higher commission rates and broker participation, and higher maintenance and utility costs as a result of having more spec homes in inventory. General and administrative expenses of $51.8 million in the three months ended September 30, 2025 decreased $7.4 million from $59.2 million in the same period of 2024 primarily from lower compensation expense. Earnings before income taxes for the three months ended September 30, 2025 of $128.2 million decreased $121.7 million year over year from $249.9 million in the same period of 2024. The effective income tax rate of 22.6% for the three months ended September 30, 2025 increased from 21.6% in 2024 due to fewer homes qualifying for energy tax credits under the Inflation Reduction Act ("IRA") in 2025. The decrease in year-over-year profitability resulted in net earnings of $99.3 million in the three months ended September 30, 2025 versus $196.0 million in the three months ended September 30, 2024.

For the nine months ended September 30, 2025, home closing volume and ASP on closings decreased 2.6% and 5.8%, respectively, for a combined decrease in home closing revenue of 8.2%. Home closing gross margin of 20.7% declined 480 basis points year over year, for a $306.1 million decrease in home closing gross profit due to greater utilization and higher cost of incentives, higher lot costs, reduced leverage of fixed costs on lower home closing revenue, and to a lessor extent, real estate-related impairments and charges incurred related to terminated land contracts, all of which were partially offset by savings in direct costs and improved construction cycle times. Year to date, commissions and other sales costs were in line with the comparable 2024 period despite the lower home closing volume. General and administrative expenses for the nine months ended September 30, 2025 increased $0.9 million year over year as lower compensation expense was more than offset by increased spend on new technology and expenses associated with start-up costs for our new divisions. Lower revenue, gross
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margin and profitability, combined with flat selling, general and administrative expenses and an effective tax rate of 23.4% led to net income of $369.0 million for the nine months ended September 30, 2025, compared to $613.5 million for the comparable 2024 period.

Home orders of 3,636 for the three months ended September 30, 2025 increased 3.5% from 3,512 home orders in the prior year quarter due to a 14.3% increase in average active communities. The higher community count was partially offset by a decrease in orders pace of 3.8 net homes per month in the third quarter of 2025, down from 4.1 in the prior year period. Home order value during the three months ended September 30, 2025 of $1.4 billion was consistent year-over-year, as the higher order volume was offset by a 4.1% decrease in ASP on orders caused by the same factors that impacted ASP on closings, discussed previously. Our cancellation rate was 11% in the third quarter of 2025, compared to 10% in the third quarter of 2024. We ended the third quarter of 2025 with 1,699 homes in backlog valued at $670.0 million, decreases of 25.6% and 28.1%, respectively, from September 30, 2024. The lower backlog units is directly tied to the backlog conversion rate of 211% during the third quarter of 2025, compared to 145% in the same quarter of 2024. The decrease in backlog and higher backlog conversion rate is a direct output of our strategy of offering move-in ready homes with a 60-day closing ready commitment, as we are selling homes later in the construction cycle and are therefore able to shorten the time between home sale and home closing. Of the homes closed in third quarter of 2025, approximately 60% were sold within the same quarter, compared to approximately 44% in the prior year period.

We ended the third quarter of 2025 with 334 active communities, up from 278 at September 30, 2024. We purchased approximately 12,200 lots for $719.6 million, spent $782.6 million on land development, net of reimbursements, and started construction on 10,756 homes during the nine months ended September 30, 2025.

Company Positioning
We believe that the investments in our new communities designed for the first-time and first move-up homebuyer, our move-in ready homes with a 60-day closing ready commitment, and our partnership with external realtors create a differentiated strategy that has aided us in our growth in the highly competitive new home market.
Our focus on growing our community count and market share includes the following strategic initiatives:
•Embracing external realtor relationships, as we view realtors as a strategic partner who assists with sourcing homebuyers, particularly first-time homebuyers who view the realtor as a trusted advisor;
•Offering our customers affordable, move-in ready homes with a 60-day closing ready commitment;
•Delivering affordable homes on a shorter timeline through simplification of production processes and maintaining levels of spec inventory that are aligned with our strategy;
•Continuously improving the overall home buying experience through simplification and innovation; and
•Increasing homeowner satisfaction by offering energy-efficient homes that are cleaner and healthier.
In addition to these strategic initiatives, we also remain committed to the following:
•Achieving or maintaining a top 5 market position in all of our markets, and maintaining our status as a top 5 national builder (based on homes closed in 2024);
•Targeting a strong, yet sustainable, orders pace through the use of consumer and market research to ensure that we build homes that offer our buyers their desired features and amenities;
•Maintaining and where possible, expanding, our home closing gross profit by growing closing volume, allowing us to better leverage our direct overhead;
•Carefully managing our liquidity and maintaining a strong balance sheet. We ended the third quarter of 2025 with a 25.7% debt-to-capital ratio and a 17.2% net debt-to-capital ratio, after issuing $500.0 million of senior notes during the first quarter of 2025;
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•Balancing return of capital to our stockholders with internal growth goals, utilizing both share repurchases and dividend payments;
•Managing construction efficiencies and costs through national and regional vendor relationships with a focus on timely, quality construction and warranty management; and
•Promoting a positive environment for our employees through our commitment to inclusion, culture, and belonging, and providing market-competitive benefits in order to develop and motivate our employees, minimize turnover and maximize recruitment efforts.

Critical Accounting Estimates
The critical accounting estimates that we deem to involve the most difficult, subjective or complex judgments include real estate valuation and cost of home closings and warranty reserves. There have been no significant changes to our critical accounting estimates during the nine months ended September 30, 2025 compared to those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our 2024 Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report").
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Home Closing Revenue, Home Orders and Order Backlog
The composition of our closings, home orders and backlog is constantly changing and is based on a changing mix of communities with various price points between periods as new projects open and existing projects wind down and close-out. Further, individual homes within a community can range significantly in price due to differing square footage, option selections, lot sizes and quality and location of lots (e.g. cul-de-sac, view lots, greenbelt lots). These variations result in a lack of meaningful comparability between our home orders, closings and backlog due to the changing mix between periods. As previously disclosed in Note 1, effective January 1, 2025, all segment information included in this Quarterly Report on Form 10-Q has been recast for all periods presented to reflect Tennessee in the Central Region. The tables on the following pages present operating and financial data that we consider most critical to managing our operations (dollars in thousands):
Home Closing RevenueThree Months Ended September 30,Quarter over Quarter
 20252024Change $Change %
Total
Dollars$1,399,335 $1,585,784 $(186,449)(11.8)%
Homes closed3,685 3,942 (257)(6.5)%
Average sales price$379.7 $402.3 $(22.6)(5.6)%
West Region
Dollars$420,658 $594,509 $(173,851)(29.2)%
Homes closed883 1,220 (337)(27.6)%
Average sales price$476.4 $487.3 $(10.9)(2.2)%
Central Region
Dollars$443,086 $484,739 $(41,653)(8.6)%
Homes closed1,260 1,346 (86)(6.4)%
Average sales price$351.7 $360.1 $(8.4)(2.3)%
East Region
Dollars$535,591 $506,536 $29,055 5.7 %
Homes closed1,542 1,376 166 12.1 %
Average sales price$347.3 $368.1 $(20.8)(5.7)%
Nine Months Ended September 30,Quarter over Quarter
20252024Change $Change %
Total
Dollars$4,357,148 $4,745,618 $(388,470)(8.2)%
Homes closed11,271 11,567 $(296)(2.6)%
Average sales price$386.6 $410.3 $(23.7)(5.8)%
West Region
Dollars$1,449,499 $1,732,978 $(283,479)(16.4)%
Homes closed3,046 3,499 $(453)(12.9)%
Average sales price$475.9 $495.3 $(19.4)(3.9)%
Central Region
Dollars$1,336,048 $1,496,889 $(160,841)(10.7)%
Homes closed3,821 4,081 $(260)(6.4)%
Average sales price$349.7 $366.8 $(17.1)(4.7)%
East Region
Dollars$1,571,601 $1,515,751 $55,850 3.7 %
Homes closed4,404 3,987 $417 10.5 %
Average sales price$356.9 $380.2 $(23.3)(6.1)%
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Home Orders (1)Three Months Ended September 30,Quarter over Quarter
 20252024Change $Change %
Total
Dollars$1,415,089 $1,425,610 $(10,521)(0.7)%
Homes ordered3,636 3,512 124 3.5 %
Average sales price$389.2 $405.9 $(16.7)(4.1)%
West Region
Dollars$426,509 $521,029 $(94,520)(18.1)%
Homes ordered867 1,067 (200)(18.7)%
Average sales price$491.9 $488.3 $3.6 0.7 %
Central Region
Dollars$468,690 $428,660 $40,030 9.3 %
Homes ordered1,289 1,184 105 8.9 %
Average sales price$363.6 $362.0 $1.6 0.4 %
East Region
Dollars$519,890 $475,921 $43,969 9.2 %
Homes ordered1,480 1,261 219 17.4 %
Average sales price$351.3 $377.4 $(26.1)(6.9)%
Nine Months Ended September 30,Quarter over Quarter
20252024Change $Change %
Total
Dollars$4,520,704 $4,630,261 $(109,557)(2.4)%
Homes ordered11,426 11,302 124 1.1 %
Average sales price$395.7 $409.7 $(14.0)(3.4)%
West Region
Dollars$1,450,859 $1,659,130 $(208,271)(12.6)%
Homes ordered2,961 3,351 (390)(11.6)%
Average sales price$490.0 $495.1 $(5.1)(1.0)%
Central Region
Dollars$1,433,125 $1,455,883 $(22,758)(1.6)%
Homes ordered3,952 3,958 (6)(0.2)%
Average sales price$362.6 $367.8 $(5.2)(1.4)%
East Region
Dollars$1,636,720 $1,515,248 $121,472 8.0 %
Homes ordered4,513 3,993 520 13.0 %
Average sales price$362.7 $379.5 $(16.8)(4.4)%
(1)Home orders for any period represent the aggregate sales price of all homes ordered, net of cancellations. We do not include orders contingent upon the sale of a customer’s existing home or a mortgage pre-approval as a sales contract until the contingency is removed.
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 Order Backlog (1)
At September 30,Quarter over Quarter
 20252024Change $Change %
Total
Dollars$670,007 $931,656 $(261,649)(28.1)%
Homes in backlog1,699 2,284 (585)(25.6)%
Average sales price$394.4 $407.9 $(13.5)(3.3)%
West Region
Dollars$176,493 $286,336 $(109,843)(38.4)%
Homes in backlog350 598 (248)(41.5)%
Average sales price$504.3 $478.8 $25.5 5.3 %
Central Region
Dollars$232,018 $267,890 $(35,872)(13.4)%
Homes in backlog612 718 (106)(14.8)%
Average sales price$379.1 $373.1 $6.0 1.6 %
East Region
Dollars$261,496 $377,430 $(115,934)(30.7)%
Homes in backlog737 968 (231)(23.9)%
Average sales price$354.8 $389.9 $(35.1)(9.0)%

(1)Our backlog represents net home orders that have not closed.

Active Communities and Cancellation Rates
Active CommunitiesThree Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
EndingAverageEndingAverageEndingAverageEndingAverage
Total334323.0278282.5334307.5278278.1
West Region8585.08685.58586.78683.2
Central Region9791.08386.59788.68391.7
East Region152147.0109110.5152132.2109103.2

 Cancellation Rates (2)
Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
Total11 %10 %10 %9 %
West Region9 %10 %8 %10 %
Central Region10 %10 %10 %10 %
East Region12 %10 %10 %9 %

(2)Cancellation rates are computed as the number of canceled units for the period divided by the gross sales units for the same period.
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Operating Results

Companywide. In the three months ended September 30, 2025, we closed 3,685 homes, 6.5% lower than 3,942 closings in the three months ended September 30, 2024. The decrease in home closing volume combined with a 5.6% lower ASP on closings led to $1.4 billion in home closing revenue for the three months ended September 30, 2025, 11.8% lower than the same period in 2024. Home order volume in the three months ended September 30, 2025 of 3,636 homes was 3.5% higher than 3,512 homes in the three months ended September 30, 2024, due to a 14.3% increase in average active communities, which was partially offset by a 7.3% lower orders pace of 3.8 net homes per month in the three months ended September 30, 2025 compared to 4.1 in the same period in 2024. The improvement in home order volume was offset by a 4.1% lower ASP on orders, leading to home order value of $1.4 billion for the three months ended September 30, 2025, which was relatively flat with the prior year period. The decline in ASP on both closings and orders was caused by increased cost and utilization of incentives and shift in geographic mix. Order cancellations of 11% for the three months ended September 30, 2025 was up just slightly from the same period of the prior year. The current run rate for cancellations across the company is below our historical company average and we believe that this demonstrates the benefits of a shorter timeline between home order and home closing that is a product of our move-in ready homes with a 60-day closing ready commitment.

For the nine months ended September 30, 2025, home closing volume of 11,271 closings was 2.6% lower than the prior year period, and ASP on closings decreased 5.8%, generating home closing revenue of $4.4 billion, an 8.2% decline from $4.7 billion in the prior year period. Home order volume of 11,426 for the nine months ended September 30, 2025 was up 1.1% over the prior year period, while a 3.4% lower ASP on orders led to a 2.4% decrease in home order value of $4.5 billion. We ended the third quarter of 2025 with our highest ever community count of 334 actively selling communities, up from 278 at September 30, 2024. The quarter ended with 1,699 homes in backlog valued at $670.0 million, compared to 2,284 units valued at $931.7 million at September 30, 2024. The lower backlog year over year is a result of our backlog conversion rate of 211% compared to 145% in the prior year period, as we are selling spec homes later in the construction cycle in order to meet our 60-day closing ready commitment.
West. The West Region generated $420.7 million in home closing revenue in the three months ended September 30, 2025, a 29.2% decrease compared to the $594.5 million in the prior year period. The lower revenue was driven by 27.6% lower closing volume of 883 homes in the three months ended September 30, 2025, compared to 1,220 homes in the prior year coupled with a 2.2% lower ASP on closings resulting from higher utilization and cost of incentives. Home orders for the three months ended September 30, 2025 of 867 were down 18.7% from 1,067 in the prior year period, despite a relatively flat average active community count year over year. The Region had a 19.0% decrease in orders pace to 3.4 net homes per month, reflecting the tougher selling environment. Home order value of $426.5 million for the three months ended September 30, 2025 decreased 18.1% due entirely to lower order volume, as ASP on orders was slightly higher due to a shift in geographic mix within the region. The West Region cancellation rate of 9% in the three months ended September 30, 2025 was an improvement from 10% in the prior year period and the lowest rate in the Company.
For the nine months ended September 30, 2025, home closing revenue of $1.4 billion decreased 16.4% due to a 12.9% decrease in home closing volume and a 3.9% lower ASP on closings for the same reasons as noted above for the third quarter. Home order volume in the West Region of 2,961 decreased 11.6% as orders pace declined to 3.8 net homes per month, partially offset by a 4.2% increase in the number of average actively selling communities. Home order value of $1.5 billion was down 12.6% due the lower volume and a slightly lower ASP. The year-to-date cancellation rate of 8% improved from 10% in the prior year period. The West Region ended the third quarter of 2025 with 350 homes in backlog valued at $176.5 million, compared to 598 units valued at $286.3 million at September 30, 2024. The lower backlog is the combined effect of the lower orders in the third quarter of 2025, along with a higher backlog conversion rate of 241% for the three months ended September 30, 2025 compared to 162% in the same period of 2024.
Central. The Central Region closed 1,260 homes in the three months ended September 30, 2025, down 6.4% from 1,346 in the prior year period. Home closing revenue of $443.1 million in the three months ended September 30, 2025 was 8.6% lower than $484.7 million in the prior year period due to the combined impact of lower home closing volume and a 2.3% decrease in ASP on closings. The decline in ASP on closings is a result of higher cost and utilization of incentives. Home order volume increased 8.9% to 1,289 homes in the three months ended September 30, 2025 due to a 2.2% improvement in orders pace of 4.7 homes per month combined with a 5.2% increase in average active community count. The increase in volume and a slight increase in ASP on orders led to a 9.3% improvement in home order value of $468.7 million in the three months ended September 30, 2025. The Central Region cancellation rate of 10% in the three months ended September 30, 2025 was consistent with the prior year period.

The Central Region had home closing revenue of $1.3 billion for the nine months ended September 30, 2025, 10.7% lower than the prior year due to a 6.4% decline in closing volume of 3,821 homes and a 4.7% decrease in ASP on closings. The
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lower ASP on closings is due to increased use and cost of incentives during the nine months ended September 30, 2025. Home order volume for the nine months ended September 30, 2025 was consistent year over year, as a 4.2% increase in orders pace of 5.0 net homes per month was offset by a 3.4% decrease in average active communities. Home order value was $1.4 billion for the nine months ended September 30, 2025, below $1.5 billion in the prior year period, due to consistent order volume but a nominally lower ASP on orders. The year-to-date cancellation rate of 10% for the nine months ended September 30, 2025 was consistent with the prior year period. The Central Region ended the quarter with 612 units in backlog valued at $232.0 million, down 14.8% and 13.4%, respectively, compared to September 30, 2024, due to a higher backlog conversion rate of 216% in the third quarter of 2025 compared to 153% in the comparable prior year quarter.
East. During the three months ended September 30, 2025, the East Region closed 1,542 homes for $535.6 million, up 12.1% and 5.7%, respectively from 1,376 closings and $506.5 million in home closing revenue in the comparable prior year period. The higher closing volume was the result of a 33.0% higher average active community count in the third quarter of 2025 and a greater percentage of homes selling and closing within the quarter. The higher volume was partially offset by a 5.7% lower ASP on home closings, resulting from greater utilization and higher cost of incentives. The Region improved home order volume over prior year by 17.4%, with orders of 1,480 for the three months ended September 30, 2025, due entirely to the higher average active community count which reflects our newer divisions and was partially offset by a 10.5% lower orders pace. The orders pace of 3.4 net homes per month compared to 3.8 in the prior year period, reflective of the tougher selling environment. Order value of $519.9 million in the three months ended September 30, 2025 increased 9.2% from $475.9 million in the prior year period due to the higher volume offset by a 6.9% decrease in ASP on orders year over year caused by increased cost and use of incentives as well as geographic mix within the Region. The East Region cancellation rate of 12% in the three months ended September 30, 2025 was up from 10% in the same prior year period but remains below our historical company average.
For the nine months ended September 30, 2025, the East Region saw improvements in home closing volume and revenue of 10.5% and 3.7%, respectively, compared to the 2024 period, closing 4,404 homes for $1.6 billion in home closing revenue for the nine months ended September 30, 2025. Home order volume increased 13.0% due to a 28.1% increase in average active communities, partially offset by an 11.6% lower orders pace of 3.8 net homes per month for the nine months ended September 30, 2025. The higher order volume led to an 8.0% increase in home order value of $1.6 billion. ASP on closing and orders both declined due to the increased cost and use of incentives and geographic mix within the region. Both home closing and order volumes include the first homes from our new divisions in Alabama and Mississippi. Similar to the third quarter, the Region's cancellation rate of 10% increased from 9% in the prior year period. The East Region ended the third quarter of 2025 with 737 homes in backlog valued at $261.5 million, down 23.9% and 30.7%, respectively, from 968 homes valued at $377.4 million at September 30, 2024. The East Region had a backlog conversion rate of 193% in the third quarter of 2025 compared to 127% in the prior year quarter, which contributed to our lower ending backlog and is an expected result of our strategy of shortening the timeline from order to close.
Land Closing Revenue and Gross Profit (in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
Land closing revenue$16,068 $2,665 $39,766 $4,970 
Land closing gross profit$192 $680 $2,638 $687 
From time to time, we may sell certain lots or land parcels to other homebuilders, developers or investors if we feel the sale will provide a greater economic benefit to us than continuing home construction or where we are looking to diversify our land positions in a specific geography or divest of assets that no longer align with our strategy. Therefore, the timing of land closings is not typically consistent between periods.

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Other Operating Information (dollars in thousands)  
 Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
 DollarsPercent of Home Closing RevenueDollarsPercent of Home Closing RevenueDollarsPercent of Home Closing RevenueDollarsPercent of Home Closing Revenue
Home Closing Gross Profit (1)
Total$266,957 19.1 %$392,565 24.8 %$903,935 20.7 %$1,210,029 25.5 %
Add: Real estate-related impairments8,693 — 8,693 — 
Add: Write-off of terminated land deals5,799 2,022 11,437 3,931 
Adjusted Home Closing Gross Profit (2)
$281,449 20.1 %$394,587 24.9 %$924,065 21.2 %$1,213,960 25.6 %
West$82,447 19.6 %$138,338 23.3 %$301,880 20.8 %$401,730 23.2 %
Add: Real estate-related impairments543 — 543 — 
Add: Write-off of terminated land deals2,544 976 3,667 2,182 
Adjusted Home Closing Gross Profit (2)
$85,534 20.3 %$139,314 23.4 %$306,090 21.1 %$403,912 23.3 %
Central$94,816 21.4 %$124,326 25.6 %$292,132 21.9 %$400,838 26.8 %
Add: Real estate-related impairments1,243 — 1,243 — 
Add: Write-off of terminated land deals104 474 663623 
Adjusted Home Closing Gross Profit (2)
$96,163 21.7 %$124,800 25.7 %$294,038 22.0 %$401,461 26.8 %
East$89,694 16.7 %$129,901 25.6 %$309,923 19.7 %$407,461 26.9 %
Add: Real estate-related impairments6,907 — 6,907 — 
Add: Write-off of terminated land deals3,151 572 7,107 1,126 
Adjusted Home Closing Gross Profit (2)
$99,752 18.6 %$130,473 25.8 %$323,937 20.6 %$408,587 27.0 %
 
(1)Home closing gross profit represents home closing revenue less cost of home closings, including impairments, if any. Cost of home closings includes land and associated development costs, direct home construction costs, an allocation of common community costs (such as architectural, legal and zoning costs), interest, sales tax, impact fees, warranty, construction overhead and closing costs.
(2)Adjusted Home closing gross profit is a non-GAAP measure and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe this non-GAAP financial measure is relevant and useful to investors in understanding our operating results and may be helpful in comparing the Company with other companies in the homebuilding and other industries to the extent they provide similar information.
Companywide. Home closing gross profit for the three months ended September 30, 2025 was $267.0 million, with a home closing gross margin of 19.1% down 570 basis points from 24.8% in the three months ended September 30, 2024. The margin decline was due to the combined impact of increased cost and utilization of incentives that resulted in lower ASPs, higher lot costs and reduced leverage of fixed costs on lower home closing revenue, all of which were partially offset by savings in direct costs and improved construction cycle times. Additionally, home closing gross margin was negatively impacted by real estate-related impairments and charges related to terminated land contracts. Excluding these charges, adjusted
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home closing gross margin was 20.1% for the three months ended September 30, 2025, compared to 24.9% for the three months ended September 30, 2024.

For the nine months ended September 30, 2025, home closing gross profit was $903.9 million, or 20.7%, down 480 basis points from 25.5% in the three months ended September 30, 2024. The lower margin for the nine months ended September 30, 2025 resulted from the combined effect of greater utilization and higher cost of incentives, higher lot costs, reduced leverage of fixed costs on lower home closing revenue, all of which were partially offset by savings in direct costs and improved construction cycle times. Similar to the third quarter of 2025, the home closing gross margin for the nine months ended September 30, 2025 included real estate-related impairment charges and charges related to terminated land deals. Excluding these charges, adjusted home closing gross margin was 21.2% and 25.6% for the nine months ended September 30, 2025 and 2024, respectively.

West. The West Region had home closing gross margin of 19.6% for the three months ended September 30, 2025, down 370 basis points from 23.3% in the three months ended September 30, 2024, due to increased cost and utilization of incentives, higher lot costs, and less leverage of fixed costs on lower home closing revenue, which were offset by savings in direct costs. Charges related to terminated land contracts and impairment charges also had a negative impact on the Region's home closing gross margin in the third quarter of 2025. Excluding these charges, adjusted home closing gross margin was 20.3% and 23.4% for the three months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, the West Region home closing gross margin of 20.8% declined 240 basis points primarily due to lower ASPs, higher lot costs, with some benefit from direct costs savings. Year-to-date home closing gross margin also included contract termination and impairment charges. Adjusted home closing gross margin was 21.1% and 23.3% for the nine months ended September 30, 2025 and 2024, respectively, when excluding these charges.

Central. The Central Region Home closing gross margin of 21.4% for the three months ended September 30, 2025 decreased 420 basis points from 25.6% in the prior year period due to increased utilization and higher cost of incentives, and lot cost increases, which were partially offset by improvements in construction cycle times. Real estate-related impairments and charges for terminated contracts also had a negative impact on home closing gross margin for both third quarter periods. Excluding these charges, adjusted home closing gross margin was 21.7% and 25.7% for the three months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, the Central Region home closing gross margin of 21.9% declined 490 basis points primarily due to increased cost and utilization of incentives, higher lot costs, and lower leverage of fixed costs on lower home closing revenue, all of which were partially offset by direct cots savings. Real estate-related impairments and contract termination charges had a nominal impact on the Central Region home closing gross margin for the nine months ended September 30, 2025 and 2024.
East. The East Region Home closing gross margin was 16.7% and 25.6% for the three months ended September 30, 2025 and 2024, respectively, an 890 basis point decrease. For the nine months ended September 30, 2025, the East Region home closing gross margin of 19.7% decreased 720 basis points from 26.9% in the same period of 2024. The margin decline in both periods was due to the increased cost and utilization of incentives, and higher lot costs, which more than offset the savings in direct costs. The impact of real estate-related impairments and charges incurred related to terminated land contracts on East Region home closing gross was 190 basis points and 90 basis points for the three and nine months ended September 30, 2025, respectively. When excluding these items from all periods presented, adjusted home closing gross margin was 18.6% and 25.8% for the three months ended September 30, 2025 and 2024, respectively, and 20.6% and 27.0% for the nine months ended September 30, 2025 and 2024, respectively.
Financial Services Profit (in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
Financial services profit$4,480 $3,101 $13,654 $7,248 
Financial services profit represents the net profit of our financial services operations, including the operating profit generated by our wholly-owned title and insurance companies, Carefree Title Agency, Inc. and Meritage Homes Insurance Agency, Inc., respectively, as well as our portion of earnings from a mortgage joint venture. The improvement in financial services profit for both the three and nine months ended September 30, 2025 was due to fewer charges related to expired interest rate forward commitments in the current year as compared to the respective prior year periods.
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Selling, General and Administrative Expenses and Other Expenses (dollars in thousands)
 Three Months Ended September 30,Nine Months Ended September 30,
 2025202420252024
Commissions and other sales costs$(99,722)$(97,898)$(303,272)$(304,113)
Percent of Home closing revenue7.1 %6.2 %7.0 %6.4 %
General and administrative expenses$(51,787)$(59,198)$(163,967)$(163,114)
Percent of Home closing revenue3.7 %3.7 %3.8 %3.4 %
Interest expense$— $— $— $— 
Other income, net$8,128 $10,682 $28,479 $31,202 
Loss on early extinguishment of debt$— $— $— $(631)
Provision for income taxes$(28,951)$(53,966)$(112,485)$(167,771)

Commissions and Other Sales Costs. Commissions and other sales costs are comprised of internal and external commissions and related sales and marketing expenses such as advertising and sales office and completed spec home inventory costs. These costs increased $1.8 million, to $99.7 million, or 7.1% of home closing revenue in the three months ended September 30, 2025, up 90 basis points from the prior year period. The higher dollar spend is largely the result of higher external broker commission rates reflecting the tougher selling environment, coupled with a higher external broker participation rate, as well as higher costs for maintaining a larger number of completed homes. Similar to the third quarter of 2025, commissions and other sales costs for the nine months ended September 30, 2025 and 2024 were 7.0% and 6.4%, respectively, due to higher commission rates and greater spec maintenance and utility costs for higher levels of spec inventory. For both the three and nine month periods of 2025, commissions and other sales costs as a percentage of home closing revenue were higher due to reduced leverage on lower home closing revenue. The increase in spec home inventory and associated overhead expenses is an output of our new 60-day closing ready commitment in order to have sufficient inventory available.

General and Administrative Expenses. General and administrative expenses represent corporate and divisional overhead expenses such as salaries and bonuses, occupancy, insurance and travel expenses. For the three months ended September 30, 2025, general and administrative expenses of $51.8 million decreased $7.4 million from $59.2 million in the prior year period, primarily due to lower compensation expense, while the percentage of home closing revenue held flat year over year at 3.7%, despite lower home closing revenue. For the nine months ended September 30, 2025, general and administrative expenses of $164.0 million were relatively flat with the prior year period, as lower compensation expense was offset by increased spend on new technology, and start-up expenses associated with our new divisions in Alabama and Mississippi. As a percentage of home closing revenue, general and administrative expenses increased 40 basis points, to 3.8% for the nine months ended September 30, 2025 as the lower compensation expense was more than offset by increased technology spend and new division start-up expenses.
Interest Expense. Interest expense is comprised of interest incurred, but not capitalized, on our senior and convertible senior notes, loans payable and other borrowings, including our Credit Facility. We recognized no interest expense for the three and nine months ended September 30, 2025 and 2024, as all interest incurred was capitalized to qualifying assets.
Other Income, Net. Other income, net, primarily consists of (i) sublease income, (ii) interest earned on our cash and cash equivalents, (iii) payments and awards related to legal settlements and (iv) our portion of pre-tax income or loss from non-financial services joint ventures. Other income, net was $8.1 million and $10.7 million for the three months ended September 30, 2025 and 2024, respectively, and $28.5 million and $31.2 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease for both 2025 periods reflects less interest income on lower average cash balances. The nine months ended September 30, 2025 also includes $3.2 million of legal settlement awards.
Loss on Early Extinguishment of Debt. For the three and nine months ended September 30, 2025 there was no loss on early extinguishment of debt. For the three months ended September 30, 2024, there was no loss on early extinguishment of debt, and for the nine months ended September 30, 2024, loss on early extinguishment of debt of $0.6 million was related to the $250.0 million redemption of our 6.00% Senior Notes due 2025 ("2025 Notes"). See Note 6 to the unaudited consolidated financial statements included in this report for more information related to the redemption of our 2025 Notes.
Income Taxes. Our effective tax rate was 22.6% and 21.6% for the three months ended September 30, 2025 and 2024, respectively, and 23.4% and 21.5% for the nine months ended September 30, 2025 and 2024, respectively. The higher rate in the three and nine months ended September 30, 2025 reflects fewer homes qualifying for energy tax credits under the Internal Revenue Code ("IRC") §45L energy-efficient homes federal tax credit, given the new higher construction thresholds required to earn these tax credits beginning in 2025.
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Liquidity and Capital Resources
Overview
We have historically generated cash and funded our operations primarily from cash flows from operating activities. Additional sources of funds may include additional debt or equity financing and borrowing capacity under our Credit Facility. We exercise strict controls and believe we have a prudent strategy for Company-wide cash management, including those related to cash outlays for land acquisition and development and spec home construction. Our principal uses of cash include acquisition and development of land and lots, home construction, operating expenses, share repurchases and the payment of interest, routine liabilities and dividends. We may also opportunistically repurchase our senior notes.
Cash flows for each of our communities depend on their stage of the development cycle, and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, zoning plat and other approvals, community and lot development, and construction of model homes, roads, utilities, landscape and other amenities. Because these costs are a component of our inventory and are not recognized in our income statement until a home closes, we incur significant cash outlays prior to recognition of earnings. In the later stages of a community, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflow associated with home and land construction was previously incurred. We strive to align our capital allocation and cash outlays with current market conditions. In times of community count growth, we incur significant outlays of cash through the land purchase, development and community opening stages whereas in in times of community count stability, these cash outlays are incurred in a more even-flow cadence with cash inflows from actively selling communities that are contributing closing volume and home closing revenue. Conversely, in a down turn environment, cash outlays for land and community count growth may be scaled back to preserve liquidity and we may curtail community count.
At September 30, 2025, we had $728.9 million of cash and cash equivalents and $825.9 million available under the Credit Facility, thereby providing approximately $1.6 billion of total available capacity.
Short-term Liquidity and Capital Resources
Over the course of the next twelve months, we expect that our primary demand for funds will be for the construction of homes, as well as acquisition and development of both new and existing lots, operating expenses, including general and administrative expenses, interest and dividend payments and share repurchases. Although we don't anticipate any early redemptions in the near term, we may opportunistically retire or redeem a portion of our senior notes. We expect to meet these short-term liquidity requirements primarily through our cash and cash equivalents on hand and the net cash flows provided by our operations.
Between our cash and cash equivalents on hand combined with the availability of liquidity from our Credit Facility, we believe that we currently have sufficient liquidity. Nevertheless, in the future, we may seek additional capital to strengthen our liquidity position, enable us to acquire additional land inventory in anticipation of improving market conditions, and/or strengthen our long-term capital structure.
Long-term Liquidity and Capital Resources
Beyond the next twelve months, our principal demands for funds will be for the construction of homes, land acquisition and development activities needed to maintain our lot supply and active community count, payments of principal and interest on our senior and convertible senior notes as they become due or mature, dividend payments and share repurchases. We expect our existing and future generated cash will be adequate to fund our ongoing operating activities as well as provide capital for investment in future land purchases and related development activities. To the extent the sources of capital described above are insufficient to meet our long-term cash needs, we may also conduct additional public offerings of our securities, refinance or secure new debt or dispose of certain assets to fund our operating activities. There can be no assurances that we would be able to obtain such additional capital on terms acceptable to us, if at all, and such additional equity or debt financing could dilute the interests of our existing stockholders or increase our interest costs.
Material Cash Requirements
We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact both short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on our unaudited consolidated balance sheets as of September 30, 2025, while others are considered future commitments for materials or services not yet provided. Our contractual obligations primarily consist of principal and interest payments on our senior and convertible senior notes, loans payable and other borrowings, including our Credit Facility, letters
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of credit and surety bonds and operating leases. We have no material debt maturities until 2027. We also have requirements for certain short-term lease commitments, funding working capital needs of our existing unconsolidated joint ventures and other purchase obligations in the normal course of business. Other material cash requirements include land acquisition and development costs, home construction costs and operating expenses, including our selling, general and administrative expenses, as previously discussed. We plan to fund these commitments primarily with cash flows generated by operations, but may also utilize additional debt or equity financing and borrowing capacity under our Credit Facility. Our maximum exposure to loss on our purchase and option agreements is generally limited to non-refundable deposits and capitalized or committed pre-acquisition costs.
For information about our loans payable and other borrowings, including our Credit Facility and senior and convertible senior notes, reference is made to Notes 5 and 6 in the notes to unaudited consolidated financial statements included in this report and are incorporated by reference herein. For information about our lease obligations, reference is made to Note 4 - Leases in the consolidated financial statements included in our Annual Report.
Reference is made to Notes 1, 3, 4, and 15 in the notes to unaudited consolidated financial statements included in this report and are incorporated by reference herein. These Notes discuss our off-balance sheet arrangements with respect to land acquisition contracts and option agreements, and land development joint ventures, including the nature and amounts of financial obligations relating to these items. In addition, these Notes discuss the nature and amounts of certain types of commitments that arise in connection with the ordinary course of our land development and homebuilding operations, including commitments of land development joint ventures for which we might be obligated, if any.
We do not engage in commodity trading or other similar activities. We had no derivative financial instruments that required derivative accounting under ASC 815-10, Derivatives and Hedging, at September 30, 2025 or December 31, 2024.
Operating Cash Flow Activities
During the nine months ended September 30, 2025 and 2024, net cash used in operating activities totaled $125.4 million and $128.0 million, respectively. Net cash used in operating activities for the nine months ended September 30, 2025 consisted primarily of a $413.2 million increase in real estate and cash generated from net earnings of $369.0 million. Cash flows used in operations in the nine months ended September 30, 2024 reflected a $723.8 million increase in real estate and cash generated from net earnings of $613.5 million.
Investing Cash Flow Activities
During the nine months ended September 30, 2025 and 2024, net cash used in investing activities totaled $41.0 million and $31.4 million, respectively. Cash used in investing activities in both periods was mainly attributable to purchases of property and equipment and investments in unconsolidated entities.
Financing Cash Flow Activities
During the nine months ended September 30, 2025 and 2024, net cash provided by financing activities totaled $243.8 million and $69.8 million, respectively. The net cash provided by financing activities in 2025 primarily reflects the net proceeds of $492.1 million from the issuance of our 5.650% Senior Notes due 2035, offset by $145.0 million of share repurchases and $91.8 million of dividends paid. The net cash provided by financing activities in the 2024 period primarily reflects the net proceeds of $557.7 million from the issuance of our 1.75% Convertible Senior Notes due 2028, offset by the early redemption of our 2025 Notes of $250.0 million principal and $61.8 million for the purchase of capped calls, along with $85.9 million of share repurchases and $81.6 million of dividends paid. See 'Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds' for more information about our authorized share repurchase program.
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We believe that our leverage ratios provide useful information to the users of our financial statements regarding our financial position and cash and debt management. Debt-to-capital and net debt-to-capital are calculated as follows (dollars in thousands):
As of
September 30, 2025December 31, 2024
Senior and convertible senior notes, net, loans payable and other borrowings$1,828,978 $1,335,878 
Stockholders’ equity5,287,520 5,141,573 
Total capital$7,116,498 $6,477,451 
Debt-to-capital (1)
25.7 %20.6 %
Senior and convertible senior notes, net, loans payable and other borrowings$1,828,978 $1,335,878 
Less: cash and cash equivalents(728,937)(651,555)
Net debt1,100,041 684,323 
Stockholders’ equity5,287,520 5,141,573 
Total net capital$6,387,561 $5,825,896 
Net debt-to-capital (2)
17.2 %11.7 %
 
(1)Debt-to-capital is computed as senior and convertible senior notes, net, loans payable and other borrowings divided by the aggregate of total senior and convertible senior notes, net, loans payable and other borrowings and stockholders' equity.
(2)Net debt-to-capital is considered a non-GAAP financial measure, and is computed as net debt divided by the aggregate of net debt and stockholders' equity. Net debt is comprised of total senior and convertible senior notes, net, loans payable and other borrowings, less cash and cash equivalents. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing.
Dividends
During the three months ended September 30, 2025 and 2024, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $0.43 and $0.375 per share, respectively. Quarterly dividends paid during the nine months ended September 30, 2025 and 2024, totaled $1.29 and $1.125 per share, respectively.
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Credit Facility Covenants
Borrowings under the Credit Facility are unsecured, but availability is subject to, among other things, a borrowing base. The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $3.3 billion (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60%. We were in compliance with all Credit Facility covenants as of September 30, 2025. Our actual financial covenant calculations as of September 30, 2025 are reflected in the table below.
Financial Covenant (dollars in thousands):Covenant RequirementActual
Minimum Tangible Net Worth> $3,725,200$5,237,434
Leverage Ratio< 60%15.6%
Investments other than defined permitted investments< $1,596,230$45,714

Seasonality
Historically, we have experienced seasonal variations in our quarterly operating results and capital requirements. We typically take orders for more homes in the first half of the year than in the second half, which has created additional working capital requirements in the first and second quarters to build our inventories to satisfy seasonally higher demand associated with our 60-day closing ready commitment homes. While we expect the seasonal orders pattern to continue over the long term, a higher backlog conversion rate and our all-spec strategy may shift the timing of home closings and capital requirements to build our inventories to earlier in the year. Additionally, seasonality may, from time to time, be affected by short-term volatility in the homebuilding industry and in the overall economy.
Recent Accounting Pronouncements
See Note 1 to our unaudited consolidated financial statements included in this report for discussion of recent accounting pronouncements.

Item 3.Quantitative and Qualitative Disclosures About Market Risk
Our fixed rate debt is made up primarily of $1.8 billion in aggregate principal amount of our senior and convertible senior notes. All outstanding senior and convertible senior notes bear fixed rates of interest, and therefore, do not expose us to financial statement risk associated with changes in interest rates. The fair values of senior and convertible senior notes change primarily when interest rates change, and in the case of our convertible senior notes, when the market price of our stock fluctuates. Except in limited circumstances, we do not have an obligation to prepay our senior notes and, as a result, changes in fair value of our senior notes should not have a significant impact until we would be required to repay such debt and access the capital markets to issue new debt. Obligations to settle our convertible senior notes by conversion may be required upon the occurrence of certain limited conversion conditions that are closely related to the fair value of the convertible senior notes, and therefore changes in the fair value of our convertible senior notes should not have a significant impact as conversion is more likely to occur under favorable stock price conditions. Our Credit Facility is subject to interest rate changes as the borrowing rates are based on SOFR or Prime (see Note 5 to our unaudited consolidated financial statements included in this report).

Item 4.Controls and Procedures
In order to ensure that the information we must disclose in our filings and submissions with the SEC is recorded, processed, summarized and reported on a timely basis, we have developed and implemented disclosure controls and procedures. Our management, with the participation of our chief executive officer ("CEO") and chief financial officer ("CFO"), has reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of September 30, 2025 (the “Evaluation Date”). Based on such evaluation, our management has concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective at a reasonable assurance level in ensuring that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that information
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required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
During the fiscal quarter covered by this Form 10-Q, there has not been any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION
Item 1.Legal Proceedings
See Note 15 to our unaudited consolidated financial statements included in this report for a discussion of our legal proceedings.

Item 1A.Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item IA "Risk Factors" in our Annual Report, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may eventually prove to materially adversely affect our business, financial condition and/or operating results. There have been no material changes in our risk factors as previously disclosed in our Annual Report.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Our Board of Directors authorized a stock repurchase program in 2019, and has subsequently authorized additional expenditures under the program, summarized in the table below.
Date authorizedDate announcedAmount authorized
February 13, 2019April 29, 2019$100,000,000 
November 13, 2020January 27, 2021$100,000,000 
August 12, 2021August 17, 2021$100,000,000 
May 19, 2022May 25, 2022$200,000,000 
November 21, 2024November 21, 2024$250,000,000 
August 21, 2025August 21, 2025$500,000,000 
There is no stated expiration for this program. The repurchases of the Company's shares may be made in the open market, in privately negotiated transactions, or otherwise. The timing and amount of repurchases, if any, will be determined by the Company's management at its discretion and be based on a variety of factors such as the market price of the Company's common stock, corporate and contractual requirements, prevailing market and economic conditions and legal requirements. The share repurchase program may be modified, suspended or discontinued at any time. As of September 30, 2025 there was $664.1 million available under this program to repurchase shares. We repurchased 772,010 shares under the program during the three months ended September 30, 2025.
PeriodTotal Number of Shares PurchasedAverage price paid per shareTotal number of shares purchased as part of publicly announced plans or programsApproximate dollar value of shares that may yet be purchased under the plans or programs
July 1, 2025 - July 31, 2025429,514 $69.85 429,514 $189,078,990 
August 1, 2025 - August 31, 2025342,496 $72.99 342,496 $664,079,207 
September 1, 2025 - September 30, 2025— $— — $664,079,207 
Total772,010 772,010 

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Item 5.Other Information
Insider Trading Arrangements
During the fiscal quarter ended September 30, 2025, no director or officer adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.





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 Item 6.Exhibits
Exhibit
Number
DescriptionPage or Method of Filing
3.1Restated Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Exhibit 3 of Form 8-K dated June 20, 2002
3.1.1Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Exhibit 3.1 of Form 10-Q for the quarter ended September 30, 1998
3.1.2Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Exhibit 3.1 of Form 8-K dated September 15, 2004
3.1.3Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Appendix A of the Definitive Proxy Statement for the 2006 Annual Meeting of Stockholders filed on April 10, 2006
3.1.4Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Appendix B of the Definitive Proxy Statement for the 2008 Annual Meeting of Stockholders filed on April 1, 2008
3.1.5Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Appendix A of the Definitive Proxy Statement filed on January 9, 2009
3.1.6Amendment to Articles of Incorporation of Meritage Homes CorporationIncorporated by reference to Exhibit 3.1.6 of Form 10-Q for the quarter ended June 30, 2025
3.2Meritage Homes Corporation Amended and Restated BylawsIncorporated by reference to Exhibit 3.1 of Form 8-K dated May 22, 2025
22List of Guarantor SubsidiariesIncorporated by reference to Exhibit 22 of Form 10-K for the year ended December 31, 2024
31.1Rule 13a-14(a)/15d-14(a) Certification of Phillippe Lord, Chief Executive OfficerFiled herewith
31.2Rule 13a-14(a)/15d-14(a) Certification of Hilla Sferruzza, Chief Financial OfficerFiled herewith
32.1Section 1350 Certification of Chief Executive Officer and Chief Financial OfficerFurnished herewith
101.0
The following information from the Meritage Homes Corporation Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 were formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets, (ii) Unaudited Consolidated Income Statements, (iii) Unaudited Consolidated Statements of Cash Flows, and (iv) Notes to Unaudited Consolidated Financial Statements.
104.0
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, formatted in Inline XBRL and contained in exhibit 101.



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
MERITAGE HOMES CORPORATION,
a Maryland corporation
By:/s/ HILLA SFERRUZZA
Hilla Sferruzza
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
Date:October 31, 2025

INDEX OF EXHIBITS
3.1
Restated Articles of Incorporation of Meritage Homes Corporation
3.1.1
Amendment to Articles of Incorporation of Meritage Homes Corporation
3.1.2
Amendment to Articles of Incorporation of Meritage Homes Corporation
3.1.3
Amendment to Articles of Incorporation of Meritage Homes Corporation
3.1.4
Amendment to Articles of Incorporation of Meritage Homes Corporation
3.1.5
Amendment to Articles of Incorporation of Meritage Homes Corporation
3.1.6
Amendment to Articles of Incorporation of Meritage Homes Corporation
3.2
Meritage Homes Corporation Amended and Restated Bylaws
22 
List of Guarantor Subsidiaries
31.1
Rule 13a-14(a)/15d-14(a) Certification of Phillippe Lord, Chief Executive Officer
31.2
Rule 13a-14(a)/15d-14(a) Certification of Hilla Sferruzza, Chief Financial Officer
32.1
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.0
The following information from the Meritage Homes Corporation Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 were formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets, (ii) Unaudited Consolidated Income Statements, (iii) Unaudited Consolidated Statements of Cash Flows, and (iv) Notes to Unaudited Consolidated Financial Statements.
104.0
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, formatted in Inline XBRL and contained in exhibit 101.



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Source: View Original Filing on SEC EDGAR

FAQ

What were Meritage Homes (MTH) Q3 2025 earnings and EPS?

Net earnings were $99,297,000 and diluted EPS was $1.39 for the quarter ended September 30, 2025.

How did MTH’s Q3 2025 revenue compare year over year?

Home closing revenue was $1,399,335,000 versus $1,585,784,000 in Q3 2024.

What is MTH’s cash position and debt as of September 30, 2025?

Cash and cash equivalents were $728,937,000; senior and convertible notes, net, totaled $1,803,167,000.

Did Meritage Homes change its credit facility in 2025?

Yes. The $910,000,000 revolver maturity was extended to July 9, 2030 and remained undrawn with $825,900,000 available.

What impairments or write-offs did MTH record in Q3 2025?

They recorded $9,292,000 in real estate and land impairments and $5,799,000 in terminated land deposit write-offs.

How many MTH shares were outstanding and were there repurchases?

Shares outstanding were 70,406,707 as of October 27, 2025. Year-to-date share repurchases totaled $145,000,000.

How many communities was MTH actively selling in?

The company reported 334 actively selling communities with base prices from approximately $176,000 to $1,020,000.
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Meritage Homes Corp

NYSE:MTH

MTH Rankings

#1410 Ranked by Market Cap
#1284 Ranked by Dividends

MTH Latest News

Oct 28, 2025
Meritage Homes reports third quarter 2025 results
Sep 16, 2025
Meritage Homes Third Quarter 2025 Earnings Conference Call and Webcast Scheduled for October 29, 2025
Sep 10, 2025
Operation Homefront Selects Two Military Families to Receive Mortgage-Free Meritage Homes in Colorado and North Carolina
Aug 25, 2025
Meritage Homes Publishes 2024 Sustainability and Corporate Responsibility Report
Aug 21, 2025
Meritage Homes Announces Quarterly Cash Dividend and $500M Increase to Share Repurchase Authorization

MTH Latest SEC Filings

Oct 28, 2025
[8-K] Meritage Homes CORP Reports Material Event
Aug 22, 2025
[Form 4] Meritage Homes Corporation Insider Trading Activity
Aug 22, 2025
[144] Meritage Homes Corporation SEC Filing
Aug 12, 2025
[Form 4] Meritage Homes Corporation Insider Trading Activity
Aug 12, 2025
[144] Meritage Homes Corporation SEC Filing

MTH Stock Data

4.75B
68.76M
2.25%
103.63%
4.35%
Residential Construction
Operative Builders
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United States
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