Meritage Homes (NYSE:MTH) shares declined 2.3% in premarket trading on Wednesday after Truist Securities downgraded the US homebuilder from Buy to Hold and reduced its price target to $72 from $80.
The revision follows Truist’s initiation of coverage in early March 2026, when the firm assigned a Buy rating and a $90 price target, citing Meritage’s speculative construction model, under which homes are built before a buyer is secured.
Truist’s latest rating change comes amid pressure on homebuilder profitability and concerns about housing affordability.
Analyst Ratings and Earnings Performance
Following the downgrade, the analyst consensus comprised five Buy ratings and four Hold ratings, with no Sell recommendations, according to the supplied figures.
Meritage reported a 38% year-on-year decline in net income in its most recent quarter, reflecting the earnings pressure facing the company.
The stock has fallen nearly 13% over the past year and remains below its 52-week high of $85.38.
Truist’s revised $72 price target represents a reduction of $8 from its previous target and $18 from the target assigned when it initiated coverage in March.
The new target reflects the brokerage’s updated assessment rather than a guaranteed future share price.
Mortgage Rates and Construction Costs Affect Homebuilders
The US homebuilding industry continues to face affordability constraints associated with elevated mortgage rates.
Higher borrowing costs affect prospective buyers’ purchasing power, particularly in the entry-level housing market.
Changes in trade policy have also increased tariff-related costs for certain construction materials, adding to expenses for homebuilders.
Meritage focuses on entry-level and first move-up buyers, making affordability an important factor in demand for its properties.
Other major homebuilders, including D.R. Horton, Lennar and PulteGroup, operate in the same market environment and face similar pressures from mortgage rates and construction costs.
Meritage Shares Underperform Broader Market in Premarket Trading
Meritage shares fell 2.3% before the opening bell, while broader US equity markets indicated gains.
The S&P 500 was up 0.3%, and the Nasdaq advanced 0.5% at the time of the report.
The difference in performance followed the Truist downgrade, although the extent to which the rating change accounted for Meritage’s share price movement cannot be established from the available information.
Investors will continue to assess the company’s earnings performance, housing demand and construction margins alongside changes in mortgage rates and building costs.
Meritage Homes stock price
