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Meritage sees choppy home sales; balance sheet discipline prescribed
By Devika Patel
Knoxville, Tenn., Feb. 3 – Meritage Homes Corp. saw demand decrease in 2022 as buyers faced rising monthly payments due to higher interest rates and low supply, partially mitigated by price cuts and rate locks.
Management is now focused on preserving cash in an uncertain environment and maintaining balance sheet discipline.
“Given slower market conditions, we are also focused on exercising balance sheet discipline,” executive vice president and chief financial officer Hilla Sferruzza said on the company’s fourth quarter and year ended Dec. 31, 2022 earnings conference call on Thursday.
“At Dec. 31, 2022, nothing was drawn on our credit facility.
“Ahead of the spring selling season, we felt it was prudent to grow our cash position to maintain maximum flexibility in an uncertain environment.
“In the coming months, we will look to strike a balance between cash preservation for operations and returning dollars to shareholders,” Sferruzza said.
“Although favorable demographics and the low supply of housing inventory should drive long-term demand, we believe they were overshadowed in the back half of the year by ongoing economic uncertainty and buyer psychology, increasing mortgage interest rates and inflation,” executive chairman Steven J. Hilton said on the call.
“Today’s higher mortgage interest rates continue to pressure housing prices as monthly payments still remain above 2020 and 2021 levels despite price cuts and rate locks.
“We believe that until rates stabilize, home sales activity will remain choppy,” Hilton said.
Meritage is a Scottsdale, Ariz.-based home builder.
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