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Meritage Homes Expands in Southeast

Zacks Equity Research

In an attempt to further expand its footprints in the Southeast region, Meritage Homes Cooperation (MTH), opened a new division in Charlotte, North Carolina. The decision to start a new division in Charlotte, the second largest banking sector in the U.S., is a well-planned one.

Charlotte is the largest metropolitan city in North Carolina, with the second largest banking center in the U.S. The area is prosperous with an educated population, excellent business opportunities and widespread industrial structure. Thus, demand for homes in Charlotte is expected to rise in the years to come.

Previously, the company had opened two new divisions in Raleigh and Tampa, and the response had been very encouraging. The company expects to use its expertise gathered in Raleigh and Tampa, to build the Charlotte division. During the first quarter of 2012, 18 homes were closed in the North Carolina division, with an average sales price of $363,700.

The company intends to build homes in the most desirable submarkets of Charlotte. The homes will be available for sale by early fourth quarter of 2012. The homes will be similar to the other Meritage Homes in Orlando and Raleigh market, and will have energy efficient features.

We appreciate Meritage Homes’ strategy to expand its operation into growing cities like Charlotte. These cities have immense propensity to grow and thus can nurture steady demand for homes in the years to come. We also appreciate the company’s ability to capitalize on the gradual recovery in the housing market by recording top-line growth and raising the price modestly. However, Meritage Homes faces tough competition from the resale markets.

Meritage Homes Cooperation carries a Zacks #3 Rank in the near term (Hold rating). One of its peers, KB Home (KBH) currently has a Zacks #4 Rank in the near term (Sell rating).

Meritage Homes is one of the-largest home building companies in the United States. Meritage builds homes for first-time, move-up, luxury and active buyers. The company has 150 actively selling communities across 15 metropolitan cities in the U.S.  

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