Meritage Homes’ First-Time Buyer Model Meets Higher Rates as Dendur Capital Exits
Summarize this article with:
Meritage Homes sits at the most rate-sensitive end of the housing market.
After Dendur Capital exited its stake, attention now turns to whether first-time buyer demand can withstand today’s mortgage environment.What happenedDendur Capital LP reported in a Securities and Exchange Commission (SEC) filing dated February 17, 2026, that it sold its entire position of 891,000 shares in Meritage Homes Corporation (MTH 0.08%). The estimated transaction value was $64.54 million, calculated using the quarterly average price. The net position change for the quarter was a $64.54 million decrease, reflecting both the sale and price movement.What else to knowThe fund fully exited its Meritage Homes Corporation stake, which represented 6.7% of AUM in the prior quarter; post-trade, the position is 0% of AUMTop holdings after this filing:NYSE:ATI: $234.03 million (24.3% of AUM)NYSE:DIS: $117.41 million (12.2% of AUM)NYSE:COF: $82.40 million (8.6% of AUM)NYSE:FLUT: $82.15 million (8.5% of AUM)NYSE:FUN: $75.99 million (7.9% of AUM)As of February 16, 2026, shares were priced at $80.60, up 12.4% over the past year, outperforming the S&P 500 by 0.59 percentage points. Company OverviewMetricValueRevenue (TTM)$5.86 billionNet Income (TTM)$453.01 millionDividend Yield2.47%Price (as of market close 2/20/26)$77.83Company SnapshotMeritage Homes Corporation is a leading U.S. residential homebuilder focused on delivering single-family homes to entry-level and move-up buyers. It designs, builds, and sells single-family homes, with additional services in title insurance and settlement for homebuyers.The company targets first-time and first move-up homebuyers in high-growth U.S. markets including Texas, Arizona, California, and several southeastern states.Meritage Homes Corporation generates revenue primarily through homebuilding operations, acquiring and developing land, constructing homes, and providing related financial services.What this transaction means for investorsHigh mortgage rates have made it harder for entry-level buyers to afford homes, which affects Meritage Homes’ main market. The company focuses on first-time and move-up buyers in fast-growing Sunbelt areas, where job growth and more people moving in help keep housing demand strong. Over the past year, Meritage has used incentives to sustain buyer interest and convert backlog into closings. Rate buydowns and closing cost support have helped buyers manage monthly payments, enabling steady order flow despite rising borrowing costs. Management has remained disciplined in land spending and community expansion, avoiding aggressive moves that could pressure returns. Limited resale inventory in core markets has also driven buyers to new construction, supporting revenue and cash flow.For investors, the clearest signal will be whether Meritage can sustain demand without giving back too much on price. If incentives keep increasing, profits could shrink even if sales stay strong. Growth in the number of communities and how the company buys land will show how confident management is about future demand. Mortgage rates remain the biggest factor, but Meritage’s focus on the Sunbelt and its strong balance sheet will be key to navigating this cycle without hurting long-term returns.About the AuthorEric Trie is a Motley Fool contributing stock analyst covering technology and semiconductors, healthcare, financial services, and consumer sectors. Previously, he worked in investment analysis and financial writing. He holds a B.A. in Philosophy from Rutgers University. Eric lives in New York City and is an avid sports fan.CMFIdeaMachineStocks MentionedMeritage HomesNYSE: MTH$77.75 (0.08%) $0.06AtiNYSE: ATI$158.78 (+3.89%) $+5.94Walt DisneyNYSE: DIS$105.57 (0.41%) $0.43Capital One FinancialNYSE: COF$208.42 (+1.64%) $+3.36Flutter Entertainment PlcNYSE: FLUT$121.02 (0.93%) $1.14Six Flags EntertainmentNYSE: FUN$18.24 (+3.75%) $+0.66*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.