Meritage Homes Reports Fourth Quarter and Fiscal Year 2007 Results



 Fourth Quarter 2007 Operating Highlights:
 -- Generated significant cash flow from operations and reduced debt
    by $153M
 -- Reduced spec inventory units by 10%, despite a 47% cancellation
    rate
 -- Reduced total lot supply by 16% from September 30 to 26,115 lots
    at year-end, down 52% from peak
 -- Reduced G&A costs by $17M to 3.1% of revenue, excluding non-cash
    expense of $11M due to stock options tendered and cancelled
 -- Operated profitably, excluding primarily non-cash, pre-tax charges
    of: $130M for real estate and joint venture valuation adjustments,
    $3M impairments of golf course assets held for sale, $58M for
    goodwill write-offs and $11M due to stock options tender expense

 Full Year 2007 Highlights:
 -- Generated significant cash flow in the second half of 2007
 -- Maintained compliance with all debt covenants at December 31, 2007
 -- Amended credit facility in September 2007 to improve flexibility
 -- Net debt-to-capital ratio of 49% at December 31, 2007; available
    borrowing capacity of $381M
 -- Operated profitably for the year, excluding primarily non-cash,
    pre-tax charges of: $398M for real estate and joint venture
    valuation adjustments, $130M for goodwill write-offs and other
    fourth quarter charges

SCOTTSDALE, Ariz., Jan. 28, 2008 (PRIME NEWSWIRE) -- Meritage Homes Corporation (NYSE:MTH) today announced fourth quarter and fiscal year results for the periods ended December 31, 2007.



                Summary Operating Results (Unaudited)
           (Dollars in thousands, except per share amounts)
 ----------------------------------------------------------------------
               Three Months Ended Dec. 31,  Fiscal Years Ended Dec. 31,
                   2007      2006  % Chg      2007        2006   % Chg
 ----------------------------------------------------------------------
 Homes closed
  (units)           2,139     2,601  -18%       7,687      10,487  -27%
 Home closing
  revenue        $615,611  $819,318  -25%  $2,334,141  $3,444,286  -32%
 ----------------------------------------------------------------------
 Sales orders
  (units)           1,048     1,202  -13%       6,290       7,778  -19%
 Sales order
  value          $271,617  $354,539  -23%  $1,804,065  $2,462,747  -27%
 ----------------------------------------------------------------------
 Ending backlog
  (units)                                       2,288       3,685  -38%
 Ending backlog
  value                                      $669,985  $1,200,061  -44%
 ----------------------------------------------------------------------
 Net (loss)/
  earnings*
  (including
  write-offs)   ($128,839)   $9,024  n/m    ($288,851)   $225,354  n/m
 Adjusted net
  earnings *
  (excluding
  write-offs)       4,076   $50,540  n/m       55,364    $273,809  n/m
 Diluted EPS
  (including
  write-offs)      ($4.91)    $0.34  n/m      ($11.01)      $8.32  n/m
 ----------------------------------------------------------------------
 * See non-GAAP reconciliation between net (loss)/earnings and
   adjusted net earnings on "Operating Results" table, page 7.
  (n/m = not meaningful)

Fourth quarter operating results

Meritage reported a net loss for the fourth quarter 2007 of $129 million, or ($4.91) per share, compared to net earnings of $9 million, or $0.34 per diluted share, in the fourth quarter 2006. The fourth quarter net loss included $130 million of pre-tax real estate-related and joint venture valuation adjustments ($48 million for terminated projects, $36 million for write-downs of inventory on continuing projects, $12 million for land held for sale, and $34 million for joint venture impairments,) and $58 million of pre-tax goodwill write-offs. The Company also incurred an $11 million non-cash pre-tax charge for the acceleration of expenses related to the cancellation of employee stock options in connection with a tender offer, and a $3 million impairment of golf course assets held for sale. By comparison, the fourth quarter of 2006 included a pre-tax charge of $63 million solely related to real estate-related valuation adjustments.

Fourth quarter 2007 home closing revenue declined 25% year over year due to an 18% decline in homes closed and a 9% decline in average closing price. Arizona had the largest decline in home closings (-44%) due to a reduced active community count, a more competitive selling environment and difficult comparisons to the fourth quarter 2006, when closings in Arizona were only 13% lower than their peak in the fourth quarter 2005. Conversely, home closings in California (-9%), Florida (-20%) and Nevada (+6%) experienced less severe declines (or reflected improvements), benefiting from easier comparisons to the prior year. These markets were some of the first to slow, and reported much larger declines a year ago.

Fourth quarter homebuilding gross margins narrowed due to lower selling prices and real estate-related charges of $84 million in 2007 and $63 million in 2006. Excluding these charges, adjusted homebuilding gross margins contracted to 12.1% in 2007 from 19.8% in 2006, reflecting more aggressive price negotiation. Average sales prices in the fourth quarter of 2007, as compared to the fourth quarter of 2006, declined 20% in Florida, 18% in California, 17% in Nevada and 13% in Arizona, while Texas ASP increased 5% and Colorado increased 14%, reflecting pricing strategies and changes in the mix between higher and lower priced homes.

General and administrative expenses of $30 million in the fourth quarter 2007 included an $11 million non-cash charge related to a stock option tender offer, with no similar expense incurred in 2006. Excluding this item in 2007, management reduced general and administrative expenses by 48% from the fourth quarter 2006, to 3.1% of fourth quarter 2007 total revenue, from 4.4% of fourth quarter 2006 total revenue. To date, Meritage has reduced total headcount by almost 40% since the peak in mid-2006, sizing its operations to reflect current market conditions. Commissions and other selling costs were 14% lower than the prior year, although higher as a percentage of total revenue due to the more competitive selling environment.

Significant progress on plans to strengthen balance sheet and liquidity

"We were very pleased with the progress we made toward strengthening our balance sheet and improving our liquidity during the fourth quarter," said Steven J. Hilton, chairman and CEO of Meritage Homes. "Aggressive sales efforts reduced our spec home inventory by 10% this quarter, despite high cancellation rates that negatively impacted our net sales and inventory reductions, while stronger seasonal closing activity reduced our pre-sold inventory. We reduced lot purchases under options by about $55 million, acquiring approximately 650 fewer lots in the fourth quarter than we did in the third. These purchases were generally in communities that had limited owned lot inventory, and additional lots were needed to continue home sales that are generating acceptable margins. We also reduced our active community count slightly from last quarter to 220 at year end.

"These actions resulted in significant positive cash flow from operations this quarter and allowed us to reduce our bank debt by $153 million, to a balance of $82 million at December 31. We plan to continue aggressively targeting spec sales and limiting lot purchases wherever possible, with a goal of reducing our credit facility debt to a zero balance by the third quarter of this year, and then start accumulating cash reserves."

Mr. Hilton continued, "We cancelled options on almost 4,500 additional lots this quarter, reducing our total lot supply to 26,115 at year-end -- a 52% reduction from our peak in the third quarter 2005. Accordingly, we've reduced our cash option deposits to $87 million -- half of their balance at the end of 2006. A large portion of our lot supply is in Texas, where the homebuilding markets have been stronger than in other parts of the country and where the terms on developer options are more flexible than land bank options. Texas accounts for nearly two-thirds of our optioned lots, almost 40% of option deposits, and more than a third of our owned lots. Of our total lots under control at December 31, 2007, we own about 40% and option about 60%. Our owned percentage has increased mainly as we have reduced the number of our lots controlled through options by almost 70% from peak levels mainly from option terminations as the housing market has slowed.

"Although impairments may continue to occur due to changes in market conditions, based on the relatively stronger Texas market and the significant impairments and option terminations we have already taken in other markets, we believe the great majority of the impairments are behind us.

"We reduced our investment in joint ventures to $27 million at year-end 2007, and believe we have little additional contingent off-balance-sheet exposure in our remaining JV's as their debt is generally non-recourse to us, and because we believe the risks associated with 'bad boy' guarantees are minimal since the triggering event is typically controlled by us, and our exposure under any other guarantees are not significant," he concluded.

The Company was in compliance with all its debt covenants at year-end, and had available borrowing capacity of $381 million under its revolving $800 million credit facility at December 31, 2007, after considering the facility's borrowing base availability and most restrictive covenants. Interest coverage ratio was 2.3 times interest incurred, based on trailing four quarters' adjusted EBITDA.

Net debt-to-capital ratio was 49% as of December 31, 2007, compared to 40% at December 31, 2006, despite a slight reduction in total debt, as the 2007 net loss reduced Meritage's book equity. The Company's credit facility extends through 2011 and the earliest maturity date on its long-term debt bonds is in 2014.

"Our primary focus in 2008 is to strengthen our balance sheet and maintain liquidity," said Mr. Hilton. "Our sales teams are focused on aggressively selling spec inventory, and we plan to further reduce our inventory of owned lots by purchasing fewer lots than our planned sales and starts. We have also received over $24 million in tax refunds thus far in 2008 and expect to receive approximately $52 million of additional tax refunds in the first quarter of this year, as we carry back our 2007 losses and recover taxes paid in 2005. The anticipated tax refund is already reflected in our receivables balance. We expect to trigger the realization, for tax purposes, of our $141 million deferred tax asset in 2008 and beyond, and we currently believe this asset is recoverable. Considering these plans, we look forward to reporting further progress in generating cash and reducing our debt in the coming quarters."

Full year operating results

Meritage reported a net loss of $289 million, or ($11.01) per share, for the full year 2007, compared to net earnings of $225 million, or $8.32 per diluted share, for the full year 2006. The 2007 loss was the result of primarily non-cash pre-tax real estate-related and joint venture valuation adjustments of $398 million, a non-cash $3 million impairment of golf course assets, goodwill-related write-offs of $130 million and a non-cash $11 million charge related to stock options tender expense, which together reduced net earnings by $344 million after the effect of taxes.

Full year home closing revenue for 2007 was $2.3 billion, nearly one-third lower than the all-time record year reported by Meritage in 2006 for home closings and revenue. The decline in home closing revenue was due to an 8% decline in average sale prices, compounding a 27% drop in homes sold. The states that experienced the greatest declines in closings for the year were Nevada (-58%) and Arizona (-49%), while Texas closings declined only 2% year over year and Colorado closings increased 43% as it builds from its start-up in 2006.

Net orders for the full year 2007 fell 19% due to turmoil in the mortgage and credit markets, rising inventories and intense pricing competition. While year over year comparisons were negative, the rates of decline in home sales slowed in most of Meritage's divisions over the last two quarters.

Backlog value was down 44% from 2006 at December 31, 2007, with a 10% decline in average sale price on 38% fewer homes in backlog, reflecting conversions to 2007 closings and high cancellations. Lower homes in backlog in Arizona (-57%), Texas (-33%) and Florida (-40%) accounted for most of the absolute decline in backlog.

Mr. Hilton noted, "We have yet to see signs of stabilization in home prices, which we believe is necessary for buyers to regain confidence that their home purchase will retain its value. We are looking for prices, sales and cancellation rates to hold steady and begin to improve to signal the start of a recovery. Until then, we plan to continue to operate conservatively, protecting our balance sheet and maintaining liquidity to weather the downturn."

Summary and future outlook

"This has been the most difficult year we've experienced in homebuilding in more than 25 years, and we currently expect 2008 will also be challenging," said Mr. Hilton. "Despite the difficult homebuilding environment, I'm proud of the progress we were able to achieve on our operational plans, and on other non-financial objectives. We reduced our spec inventory and lots under control, continued to shrink overhead costs and generated significant positive cash flow in the second half of 2007.

"We also improved our sales training, marketing and customer relations, including significant increases in our customer satisfaction ratings during 2007. We completed the implementation of new management software across all divisions, recognized substantial savings in purchasing, and made many improvements in our human resources and benefits systems. Each of these improved our organizational efficiency or abilities to better serve our customers.

"I appreciate the efforts of our employees who have worked so diligently to address the daily challenges and opportunities we face, with an optimistic attitude toward better times ahead," Mr. Hilton concluded. "We are committed to protecting shareholder value as we manage the Company through this downturn, delivering high quality homes and meeting the expectations of our buyers, to strengthen Meritage's position for the future."

Conference call and webcast

The Company will host a conference call and webcast on January 29, 2008, at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) to discuss fourth quarter and full year 2007 results. The conference call will be webcast by B2i and available through the "Investor Relations" page of the Company's web site at http://www.meritagehomes.com. For telephone participants, the dial-in number is 800-374-0113 with a passcode of "Meritage." Participants are encouraged to dial in five minutes before the call begins. A replay of the call will be available after 3:00 p.m. EST January 29, 2008, through midnight February 29, 2008 on the website noted above, or by dialing 800-642-1687, and referencing passcode 30747642.



             Meritage Homes Corporation and Subsidiaries
                          Operating Results
                             (Unaudited)
                (In thousands, except per share data)

                           Three Months Ended         Years Ended
                              December 31,            December 31,
 Operating results           2007       2006       2007        2006
                             ----       ----       ----        ----
 Home closing revenue     $ 615,611  $ 819,318  $2,334,141  $3,444,286
 Land closing revenue         3,297      1,875       9,453      17,034
                          ---------  ---------  ----------  ----------
  Total closing revenue     618,908    821,193   2,343,594   3,461,320
 Home closing gross
  (loss)/profit              (9,321)   100,671      28,135     711,988
 Land closing gross
  (loss)/profit             (11,690)      (708)    (12,089)        642
                          ---------  ---------  ----------  ----------
  Total closing gross
   (loss)/profit            (21,011)    99,963      16,046     712,630
 Commissions and other
  sales costs               (51,461)   (59,531)   (196,464)   (216,341)
 General and
  administrative
  expenses(1)               (29,776)   (36,064)   (106,161)   (164,477)
 Goodwill-related
  impairments               (57,538)        --    (130,490)         --
 Interest expense            (4,601)        --      (6,745)         --
 Other (expense)/income,
  net(2)                    (30,092)     9,253     (29,668)     32,197
                          ---------  ---------  ----------  ----------
 (Loss)/earnings before
  provision for
  income taxes             (194,479)    13,621    (453,482)    364,009
 Benefit/(provision) for
  income taxes               65,640     (4,597)    164,631    (138,655)
                          ---------  ---------  ----------  ----------
 Net (loss)/earnings       (128,839)     9,024    (288,851)    225,354
                          =========  =========  ==========  ==========
 (Loss)/earnings per share
 Basic:
  (Loss)/earnings per
   share                  $   (4.91) $    0.35  $   (11.01) $     8.52
  Weighted average shares
   outstanding               26,250     26,133      26,225      26,448
 Assuming dilution:
  (Loss)/earnings per
   share                  $   (4.91) $    0.34  $   (11.01) $     8.32
  Weighted average shares
   outstanding               26,250     26,557      26,225      27,102


 (1) General and administrative expenses include the following:

 Severance-related
  expenses                $     616  $     599  $    3,075  $   13,361
 Non-cash stock option
  tender expense          $  10,866  $      --  $   10,866  $       --

 (2) Other income includes joint venture and golf course asset
     impairments as discussed in the non-GAAP reconciliations on the
     following page.


             Meritage Homes Corporation and Subsidiaries
                          Operating Results
                             (Unaudited)
                (In thousands, except per share data)

                                Three Months Ended      Years Ended
                                   December 31,         December 31,
                                 2007       2006       2007     2006
                                 ----       ----       ----     ----
 Non-GAAP Reconciliations:
 Total closing gross (loss)/
  profit                      $ (21,011) $ 99,963  $  16,046  $712,630
 Add: Real estate-related
  impairments
  Terminated lot options/land
   sales                         60,068    47,128    144,752    54,598
  Impaired projects              36,006    15,537    195,606    23,670
                              ---------  --------   --------  --------
 Adjusted closing gross
  profit                      $  75,063  $162,628  $ 356,404  $790,898
                              =========  ========  =========  ========
 (Loss)/earnings before
  provision for income taxes  $(194,479) $ 13,621  $(453,482) $364,009
 Add:
 Real estate-related
  impairments
  Terminated lot options/land
   sales                         60,068    47,128    144,752    54,598
  Impaired projects              36,006    15,537    195,606    23,670
  Joint venture impairments      33,451        --     57,940        --
 Impairment of golf course
  assets held for sale            3,124        --      3,124        --
 Goodwill-related impairments    57,538        --    130,490        --
 Non-cash stock options tender
  expense                        10,866        --     10,866        --
                              ---------  --------  ---------  --------
 Adjusted earnings before
  provision for income taxes      6,574    76,286     89,296   442,277
 Adjusted provision for income
  taxes                          (2,498)  (25,746)   (33,932) (168,468)
                              ---------  --------  ---------  --------
 Adjusted net earnings        $   4,076  $ 50,540  $  55,364  $273,809
                              =========  ========  =========  ========

                   Meritage Homes Corporation and Subsidiaries
                        Non-GAAP Financial Disclosures
                                   (Unaudited)
                              (Dollars in thousands)

                                                As of and for the
                      Three Months Ended       Four Quarters Ended
                         December 31,              December 31,
                       2007        2006         2007         2006
                       ----        ----         ----         ----
 EBITDA
  reconciliation:
  (a)
 Net (loss)/
  earnings         $  (128,839)   $  9,024  $  (288,851) $   225,354
 (Benefit)/
  provision for
  income taxes         (65,640)      4,597     (164,631)     138,655
 Interest expensed
  or amortized
  to cost of sales      18,349      10,199       48,994       42,986
 Depreciation and
  amortization           4,362       8,457       17,818       23,729
                   -------------------------------------------------
 EBITDA            $  (171,768)     32,277  $  (386,670) $   430,724
 Add back:
 Real estate-
  related
  impairments          129,525    $ 62,665      398,298       78,268
 Impairment of
  golf course
  assets held for
  sale                   3,124          --        3,124           --
 Goodwill-related
  impairments           57,538          --      130,490           --
                   -------------------------------------------------
 Adjusted EBITDA   $    18,419    $ 94,942  $   145,242  $   508,992
                   =================================================

 Interest coverage
  ratio: (b)

 Adjusted EBITDA                            $   145,242  $   508,992
 Interest incurred                               62,176       52,063
 Interest coverage
  ratio                                             2.3          9.8

 Net debt-to-
  capital: (c)
 Notes payable and
  other borrowings                          $   729,875  $   733,276
 Less: cash and
  cash equivalents                              (27,677)     (56,710)
                                            ------------------------
 Net debt                                       702,198      676,566
 Stockholders'
  equity                                        730,164    1,006,832
                                            ------------------------
 Capital                                    $ 1,432,362  $ 1,683,398
 Net debt-to-
  capital                                          49.0%        40.2%


 (a) EBITDA and adjusted EBITDA are non-GAAP financial measures,
     representing net earnings before interest expense amortized to
     cost of sales, income taxes, depreciation and amortization, with
     write-offs and impairment charges also excluded from adjusted
     EBITDA. EBITDA is presented here because it is used by
     management to analyze and compare Meritage with other
     homebuilding companies on the basis of operating performance,
     and by investors and analysts in the homebuilding industry.
     EBITDA as presented may not be comparable to similarly titled
     measures reported by other companies because not all companies
     calculate EBITDA in an identical manner and, therefore, it is
     not necessarily an accurate means of comparison between
     companies. EBITDA is not intended to represent cash flows for
     the period or funds available for management's discretionary use
     nor has it been presented as an alternative to operating income
     or as an indicator of operating performance and it should not
     be considered in isolation or as a substitute for measures of
     performance prepared in accordance with GAAP. Adjusted EBITDA is
     presented because it more closely, although not exactly,
     resembles the comparable covenant calculations under our
     revolving credit facility and senior and senior subordinated
     note indentures.

 (b) Interest coverage ratio as presented is calculated as the
     trailing four quarters' adjusted EBITDA divided by total
     interest incurred for the same period. This calculation may
     differ from our interest coverage ratio as computed for our
     credit facility covenant due to additional non-cash reconciling
     items, such as stock compensation and tender offer expense.

 (c) Net debt-to-capital is calculated as notes payable and other
     borrowings less cash and cash equivalents, divided by the sum of
     notes payable and other borrowings, less cash and cash
     equivalents, plus stockholders' equity.

                    Meritage Homes Corporation and Subsidiaries

                      Condensed Consolidated Balance Sheets

                                 (In thousands)

                                Dec. 31,     Sept. 30,    Dec. 31,
                                  2007          2007        2006
                               ----------   ----------   ----------
                               (unaudited)  (unaudited)
 Assets:
  Cash and cash equivalents    $   27,677   $   45,297   $   56,710
  Receivables                     118,591       93,573       68,725
  Real estate (a)               1,273,746    1,504,137    1,530,602
  Investment in unconsolidated
   entities                        26,563       57,387      114,250
  Deferred tax assets             140,970      110,390       28,119
  Option deposits                  87,191      106,768      167,132
  Other assets                     76,511      157,916      204,987
                               ------------------------------------
   Total Assets                $1,751,249   $2,075,468   $2,170,525
                               ====================================

 Liabilities:
  Senior notes                 $  628,802   $  628,760   $  478,636
  Revolving facility               82,000      234,500      226,500
  Other borrowings                 19,073       20,667       28,140
  Accounts payable, accrued
   liabilities, homebuyer
   deposits and other
   liabilities                    291,210      338,643      430,417
                               ------------------------------------
 Total liabilities              1,021,085    1,222,570    1,163,693
                               ------------------------------------
 Total stockholders' equity       730,164      852,898    1,006,832
                               ------------------------------------
 Total liabilities &
  stockholders' equity         $1,751,249   $2,075,468   $2,170,525
                               ====================================

 (a) Real estate assets are
  comprised of the following:
 Homes under contract under    $  333,533   $  535,405   $  589,241
  Construction
 Finished homesites and
  homesites under development     591,289      624,098      592,949
 Unsold homes, completed and
  under Construction              236,094      255,334      271,559
 Model homes                       61,171       59,237       39,131
 Model home lease program          19,073       20,667       26,831
 Land held for development         32,586        9,396       10,891
                               ------------------------------------
 Total real estate             $1,273,746   $1,504,137   $1,530,602
                               ====================================


             Meritage Homes Corporation and Subsidiaries
                      Operating Data (Unaudited)
                        (Dollars in thousands)

                                      For the Three Months Ended
                                            December 31,
                                        2007             2006
                                  ----------------  ----------------
                                  Homes    Value    Homes     Value
                                  -----    -----    -----     -----
 Homes Closed:
   California                       277  $ 114,840    305   $ 154,648
   Nevada                            87     27,094     82      30,799
                                  -----  ---------  -----   ---------
  West Region                       364    141,934    387     185,447

   Arizona                          489    145,264    880     300,289
   Texas                          1,140    283,568  1,173     277,343
   Colorado                          35     13,927     23       8,026
                                  -----  ---------  -----   ---------
  Central Region                  1,664    442,759  2,076     585,658

   Florida                          111     30,918    138      48,213
                                  -----  ---------  -----   ---------
  East Region                       111     30,918    138      48,213
                                  -----  ---------  -----   ---------

   Total                          2,139  $ 615,611  2,601   $ 819,318
                                  =====  =========  =====   =========

 Homes Ordered:
   California                       132  $  55,904    151   $  74,127
   Nevada                            63     16,508     49      28,575
                                  -----  ---------  -----   ---------
  West Region                       195     72,412    200     102,702

   Arizona                          168     37,608    329      91,139
   Texas                            573    134,826    669     168,256
   Colorado                          23      7,046     27       9,866
                                  -----  ---------  -----   ---------
  Central Region                    764    179,480  1,025     269,261

   Florida                           89     19,725    (23)*   (17,424)*
                                  -----  ---------  -----   ---------
  East Region                        89     19,725    (23)*   (17,424)*
                                  -----  ---------  -----   ---------
   Total                          1,048  $ 271,617  1,202   $ 354,539
                                  =====  =========  =====   =========

 * Negative balance represents the total unit/value of home orders
   cancelled exceeding the unit/value of total home orders taken.


                 Meritage Homes Corporation and Subsidiaries
                          Operating Data (Unaudited)
                            (Dollars in thousands)

                          As of and for the Years Ended December 31,
                                 2007                    2006
                        ----------------------  ----------------------
                           Homes       Value        Homes      Value
                           -----       -----        -----      -----
 Homes Closed:
  California                   908  $  421,220       1,471  $  820,583
  Nevada                       261      88,837         620     244,343
                        ----------  ----------  ----------  ----------
  West Region                1,169     510,057       2,091   1,064,926

  Arizona                    1,718     567,888       3,355   1,102,662
  Texas                      4,164   1,043,160       4,263     996,739
  Colorado                     160      60,069         112      40,875
                        ----------  ----------  ----------  ----------
  Central Region             6,042   1,671,117       7,730   2,140,276

  Florida                      476     152,967         666     239,084
                        ----------  ----------  ----------  ----------
  East Region                  476     152,967         666     239,084
                        ----------  ----------  ----------  ----------
  Total                      7,687  $2,334,141      10,487  $3,444,286
                        ==========  ==========  ==========  ==========

 Homes Ordered:
  California                   846  $  372,936         983  $  529,435
  Nevada                       268      85,772         328     139,668
                        ----------  ----------  ----------  ----------
  West Region                1,114     458,708       1,311     669,103

  Arizona                    1,203     341,140       1,833     611,266
  Texas                      3,427     845,348       4,299   1,069,437
  Colorado                     168      59,423         125      47,836
                        ----------  ----------  ----------  ----------
  Central Region             4,798   1,245,911       6,257   1,728,539

  Florida                      378      99,446         210      65,105
                        ----------  ----------  ----------  ----------
  East Region                  378      99,446         210      65,105
                        ----------  ----------  ----------  ----------
  Total                      6,290  $1,804,065       7,778  $2,462,747
                        ==========  ==========  ==========  ==========

 Order Backlog:
  California                   164  $   81,532         226  $  129,816
  Nevada                        64      18,660          57      21,725
                        ----------  ----------  ----------  ----------
  West Region                  228     100,192         283     151,541

  Arizona                      390     120,558         905     347,306
  Texas                      1,472     384,351       2,209     582,163
  Colorado                      53      18,137          45      18,783
                        ----------  ----------  ----------  ----------
  Central Region             1,915     523,046       3,159     948,252

  Florida                      145      46,747         243     100,268
                        ----------  ----------  ----------  ----------
  East Region                  145      46,747         243     100,268
                        ----------  ----------  ----------  ----------
  Total                      2,288  $  669,985       3,685  $1,200,061
                        ==========  ==========  ==========  ==========


             Meritage Homes Corporation and Subsidiaries
                      Operating Data (Unaudited)

                           Fiscal Year 2007        Fiscal Year 2006
                           ----------------        ----------------
                           Beg.         End        Beg.         End
 Active                    ----         ---        ----         ---
 Communities:
   California               26           27         20           26
   Nevada                    5           11          6            5
                         -----       ------      -----        -----
  West Region               31           38         26           31

   Arizona                  42           36         35           42
   Texas                   121          127        108          121
   Colorado                  6            6          3            6
                         -----       ------      -----        -----
  Central Region           169          169        146          169

   Florida                  13           13         12           13
                         -----       ------      -----        -----
  East Region               13           13         12           13
                         -----       ------      -----        -----

       Total               213          220        184          213
                         =====       ======      =====        =====

About Meritage Homes Corporation

Meritage Homes Corporation (NYSE:MTH) builds primarily single-family homes across the southern and western United States under the Meritage, Monterey and Legacy brands. Meritage has active communities in Houston, Dallas/Ft. Worth, Austin, San Antonio, Phoenix/Scottsdale, Tucson, Las Vegas, the East Bay/Central Valley and Inland Empire of California, Denver and Orlando. The Company is ranked by Builder magazine as the 12th largest homebuilder in the U.S. and ranked #580 on the 2007 Fortune 1000 list. For more information about the Company, visit www.meritagehomes.com.

The Meritage Homes Corporation logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=2624

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include those regarding the Company's plans or goals for spec inventory reduction, lot supply reduction, generating positive cash flow and using it for debt reduction, as well as management's intention to operate conservatively, strengthen the balance sheet and improve liquidity to take advantage of future opportunities; management estimates regarding future impairments and joint venture exposure; expectations that 2008 will be just as challenging as 2007; the significance of buyer confidence, home prices, sales and cancellations signaling a turnaround in the market; and expected impact of deferred tax assets on future cash outlays. Such statements are based upon the current beliefs and expectations of Company management and current market conditions, which are subject to change. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, to update any forward-looking statements to reflect future events or changes in these expectations.

Meritage's business is subject to a number of risks and uncertainties, including: fluctuations in demand, competition, sales orders, cancellation rates and home prices in our markets; potential write-downs or write-offs of assets or deposits; interest rates and changes in the availability and pricing of residential mortgages; housing affordability; our success in locating and negotiating potential acquisitions; successful integration of acquired operations with existing operations; our investments in land and development joint ventures; our dependence on key personnel and the availability of satisfactory subcontractors; materials and labor costs; our ability to take certain actions because of restrictions contained in the indentures for our senior and senior subordinated notes and the agreement for our unsecured credit facility; our lack of geographic diversification; the cost and availability of insurance, including the unavailability of insurance for the presence of mold; our potential exposure to natural disasters; the impact of construction defect and home warranty claims; demand for and acceptance of our homes; changes in the availability and pricing of real estate in the markets in which we operate; our ability to acquire additional land or options to acquire additional land on acceptable terms; our exposure to obligations under performance and surety bonds, performance guarantees and letters of credit; general economic slow downs; consumer confidence, which can be impacted by economic and other factors such as terrorism, war, or threats thereof and changes in energy prices or stock markets; inflation in the cost of materials used to construct our homes; our level of indebtedness and our ability to raise additional capital when and if needed; legislative or other initiatives that seek to restrain growth or new housing construction or similar measures and other factors identified in documents filed by us with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2006, and Form 10-Q for the quarter ended September 30, 2007, under the caption "Risk Factors." As a result of these and other factors, the Company's stock and note prices may fluctuate dramatically.

CONTACT:  Meritage Homes Corporation
          Investor Relations:
          Brent Anderson, Vice President-Investor Relations
            (972) 543-8207
          Corporate Communications:
          Jane Hays, Vice President-Corporate Communications
            (972) 543-8123