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Meritage Homes has posted a first-quarter loss, which is mainly attributed to a drop in sales of new homes in Arizona. During the quarter, Meritage has managed to reduce its new home inventory by 31 percent, which should lead to firmer prices and increased demand in 2009.
“Stabilizing prices should help improve buyer confidence over the next several quarters, and lead to improving demand in 2009 and beyond”, says Steve Hilton, chairman and chief executive of Meritage.
Meritage isn’t the only large homebuilder to successfully decrease their number of inventory homes, which is a good sign for the housing industry and the economy as a whole. However, the U.S. Commerce Department, reported last week, that new home sales in March dropped 8.5 percent to the lowest level since 1991.
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1 Comment Received
May 6th, 2008 @6:03 pm
As a former employee of Meritage Homes, I can say that I am not surprised. I think the builders that will be hit the worst will be the same ones that benefited the most by the hot market. I expect that the builders that grew externally by acquiring other builders in the hot market will be sorry that they grew so quickly on paper. The more conservative builders, like Ryland Homes, that grew internally since the 1980’s will survive the market slowdown. Leverage can be great in a bull market but also cut you in half when the market goes in the opposite direction.
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