became the latest homebuilder to warn that it likely won't meet its full-year earnings guidance due to further deterioration in the housing market over the past two months.
The Scottsdale, Ariz.-based builder said Wednesday that sales for April and May were weaker than expected, falling 21% from the same period last year. Cancellations increased to a rate of 36% of orders from the 27% rate in the first quarter.
"We were encouraged by sales and cancellation rates that improved each month of the first quarter, leading us to anticipate relatively stronger second quarter sales results,'' said Steven J. Hilton, chairman and CEO of Meritage. "But these positive trends ended at the beginning of April, as demand slowed and cancellations rose. The weaker conditions we noted in April when we reported our first quarter results, continued through May."
Meritage blamed the recent downturn on credit tightening and the troubles in the subprime-lending market, which the company said hurt buyers' confidence and demand for homes.
Meritage said this weaker demand has forced it to cut prices, thus hurting margins, which will prevent it from meeting its earlier guidance. The builder also warned of the potential for more write-offs of land options and impairment charges.
In April, Meritage projected 2007 earnings of $2 to $2.50 a share. Analysts polled by Thomson Financial project earnings of $1.37 a share.
Last week, fellow builder
withdrew its full-year guidance, saying that real estate conditions have gotten worse in recent months.
also warned last month that it doesn't see a housing rebound anytime soon.
Shares of Meritage Homes were down 58 cents, or 1.8%, to $32.52 in after-hours trading.