Meritage Homes Corp. (MTH) is perfectly situated to take advantage of the Millennial home buying rush. This Zacks Rank #1 (Strong Buy) is expected to grow its revenue by the double digits in both 2020 and 2021.
Meritage is the 7th largest public homebuilder in the United States. It has 300 communities across 9 states including Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina and Tennessee.
It focuses on first-time and first move-up buyers.
Unprecedented Demand in July and August
On Sep 21, Meritage put out a business update on its first two months of the third quarter which included July and August.
It saw “unprecedented demand” in those two months and already sold more in just 2 months than it sold in the entire third quarter of last year.
Meritage also saw the strong demand continue into September.
In July and August, total orders jumped 73% year-over-year to 2,675 homes, up from 1,549 homes in the same period a year ago.
Average absorptions for those 2 months nearly doubled over the prior year to about 6 homes per month per community, net of 13% order cancellations in 2020 and 17% in 2019.
The company expects to close out some of its communities in late 2020 and early 2021 due to the strong demand so it’s on the hunt for new land positions so it can continue to grow its community count in 2021.
Meritage expected to put a record number of new lots under control in the third quarter, possibly more than 9,000 in total.
For the first 3 quarters, that would be 17,000 lots, which is close to the total number of lots it acquired in all of 2019 and is 70% more than 2018’s 10,000 lots.
Like all the homebuilders right now, Meritage has pricing