Meritage Homes Reports Third Quarter Results and Adjusts Guidance for 2006

Dallas, Texas, UNITED STATES




 THIRD QUARTER RESULTS (2006 COMPARED TO 2005):
  -- 2,636 homes closed (+14%) with ASP of $332K (+2%) for $876
     million revenue (+16%)
  -- Net earnings of $60 million (-15%), or $2.25 diluted EPS (-6%)
  -- Gross margin of 20% includes $9 million cancelled lot options
     and inventory write-downs
  -- Net orders for 1,870 homes decline 36% with cancellations at
     all-time highs
  -- Order backlog decreases 33% to 5,084 homes valued at $1.66
     billion
  -- Net debt-to-capital ratio improves to 42%
  -- After-tax return on assets improves to 16%, return on equity 36%

 FULL YEAR 2006:
  -- Diluted EPS expected to be $9.00-9.50 on $3.4-3.5 billion
     revenue

SCOTTSDALE, Ariz., Oct. 25, 2006 (PRIMEZONE) -- Meritage Homes Corporation (NYSE:MTH) today announced third-quarter and year-to-date results for the period ended September 30, 2006.



                 Summary Operating Results (Unaudited)
           (Dollars in thousands, except per share amounts)
 ---------------------------------------------------------------------
                                               As of and for the
                   Three Months Ended          Nine Months Ended
                       September 30,              September 30,
                   2006     2005     %Chg     2006        2005    %Chg
 ---------------------------------------------------------------------
 Homes closed
  (units)           2,636     2,310   14%       7,886       6,192   27%
 Home closing
  revenue        $875,743  $753,505   16%  $2,624,968  $1,956,235   34%
 ---------------------------------------------------------------------
 Sales orders
  (units)           1,870     2,929  -36%       6,576       8,499  -23%
 Sales order
  value          $581,230  $970,535  -40%  $2,108,208  $2,857,492  -26%
 ---------------------------------------------------------------------
 Ending
  backlog
  (units)              --        --    --       5,084       7,536  -33%
 Ending
  backlog
  value                --        --    --  $1,664,840  $2,498,948  -33%
 ---------------------------------------------------------------------
 Net
  Earnings(a,b)  $ 59,539  $ 70,253  -15%  $  216,330  $  153,688   41%
 Diluted
  EPS(a,b)       $   2.25  $   2.40   -6%  $     7.94  $     5.35   48%
 ---------------------------------------------------------------------
 (a) The three- and nine-month periods ended September 30, 2006 include
     charges related to the adoption of SFAS 123R of $2.0 million 
     ($1.5M after-tax) and $9.3 million ($6.8M after-tax), respectively,
     plus severance and other employee departure-related costs of $1.1
     million ($0.7M after-tax) and $12.8 million ($7.9M after-tax),
     respectively.

 (b) The nine-month period ended September 30, 2005 includes a charge of
     $31.5 million related to a series of refinancing transactions that 
     reduced after-tax net earnings by $19.7 million, or $.68 per diluted
     share.

"We're pleased to report the results we achieved this quarter, especially considering that market conditions continued to be very challenging," commented Meritage Chairman and Chief Executive Officer Steven J. Hilton. "This has been an extremely fast reversal of fortune from just a year ago, and will be a significant test of homebuilders' strategies and skillfulness as we manage through these times. We look forward to facing these challenges and the opportunities they present with the strategies and team we have in place today at Meritage."

Third quarter revenue and earnings

Meritage delivered 2,636 homes for record third quarter home closing revenue of $876 million, a 16% increase over third quarter 2005 home closing revenue of $754 million on 2,310 homes. These increases are the result of closing 45% of orders in beginning backlog, combined with a 2% increase in average price to $332,000 this quarter compared to $326,000 in the third quarter 2005.

Third quarter net earnings and diluted earnings per share declined 15% and 6%, respectively, year over year to $60 million or $2.25 per diluted share, compared to $70 million or $2.40 per diluted share in 2005, reflecting a lower gross margin. Third quarter gross margin fell to 20.3% from 23.6% a year ago, as higher incentives reduced home closing revenues, while costs of sales rose due to higher lot costs and inventory write-downs. Meritage incurred $9 million in charges related to forfeited lot option deposits and inventory valuation write-downs caused by price declines in certain markets.

Commissions and other sales costs were higher during the quarter as a result of increased advertising, marketing and co-brokered sales. General and administrative expenses increased just slightly, including $2.0 million pre-tax expenses for stock-based compensation in the third quarter 2006 related to the adoption of SFAS 123R and $1.1 million of severance-related costs. Excluding these expenses, G&A would have improved to 3.6% of revenue from 4.2% in the prior year period. This improvement reflects the Company's successful efforts to control overhead, including additional personnel adjustments made during the quarter.

Year-to-date revenue and earnings

For the first nine months of the year, closings of 7,886 homes and related revenue of $2.6 billion increased 27% and 34%, respectively, over 2005, primarily reflecting closings from the record backlog of sales that occurred in 2005. Year-to-date net earnings of $216 million reflected a 41% increase in 2006 over $154 million in 2005, or 25% after excluding a $19.7 million after-tax charge in 2005 for refinancing debt. Earnings in 2006 were reduced by after-tax charges of $6.8 million of stock-based compensation expense related to the adoption of SFAS 123R and $7.9 million of severance and other employee departure-related costs.

Orders and backlog

Net orders for the third quarter 2006 declined 36% year over year to 1,870 homes, reflecting a slower sales pace across the board. Meritage's weakest markets were in Florida, although California, Arizona and Nevada had a greater impact on the total decline in sales. New community openings and slower sell-outs of existing communities coupled with lower sales, resulted in net sales per average community falling from 17 one year ago to nine this quarter.

Cancellations occurred at an all-time quarterly high of 37% of gross orders in the third quarter, or 19% of beginning backlog, compared to 21% of gross orders or 12% of beginning backlog in third quarter 2005. As a result of slower sales, higher cancellations and increased closings in the last twelve months, backlog declined 33% year-over-year in both units and dollar value, to 5,084 homes valued at $1.7 billion.

Average order prices were 5% lower on year-to-date orders for Meritage, and 6% lower in the third quarter, due to higher incentives in our weaker markets and an increase in the proportion of sales in lower-priced markets such as Texas. Texas markets represented 61% of Meritage's total orders in the third quarter and 55% in the first nine months of 2006, up from 45% and 40% in the respective periods in 2005.

"Demand has clearly slowed in many of our major markets, as demonstrated by declining order trends reported by other public homebuilders and rising inventories of existing homes," commented Mr. Hilton. "While our Texas markets remain relatively strong, Florida -- particularly the Ft. Myers/Naples area -- is our most challenging market today. High cancellations -- driven by buyers' fears or inability to sell their existing homes -- are resulting in lower net orders, higher unsold inventories, more costly incentives and lower margins as we work to resell these homes."

Tactical adjustments

"We are responding to weaker conditions across many of our markets by making tactical adjustments to maintain a strong balance sheet, improve our margins and position ourselves for the next up-cycle," said Hilton. "We are increasing marketing efforts through additional sales training and advertising, increasing the frequency of customer contact to manage our backlog, and aggressively working to reduce unsold inventories of homes. We are re-evaluating and renegotiating land option contracts based on recent sales pace and prices. We're re-bidding construction contracts and actively managing overhead costs. Unfortunately, we have had to shrink our employee base in some markets."

Higher cancellations have caused the percentage of unsold homes in inventory to more than double from historic levels as of September 30, 2006. The Company had 363 unsold completed homes and another 981 unsold homes under construction, representing 7% and 18% of total inventory of homes. Meritage continues its build-to-order strategy, with 75% of homes being built or completed under home sales contracts at quarter-end.

Approximately 88% of the Company's total 52,000-lot supply at quarter-end was controlled under purchase agreements and option contracts. Hilton added, "We have limited our total lot growth while adding lots in stronger markets during recent quarters. We've reduced our total lot supply by more than 2,100 since the beginning of the year, and now have 4,200 fewer lots outside of Texas than when we entered the year. We expect to further reduce our total lot supply by as many as 2,500 lots by year-end."

Balance sheet

"Our strategies to limit financial risks by subcontracting our home construction, managing relatively low levels of debt, maximizing the benefits of options in controlling land, and building relatively few spec homes, have enabled us to produce some of the best returns in the industry while simultaneously managing a very strong balance sheet," Hilton continued.

Management maintained a strong balance sheet and liquidity throughout the quarter, reporting a net debt-to-capital ratio of 41.7% at September 30, 2006, compared to 45.3% one year earlier. Debt to EBITDA improved to 1.3 from 1.7 year over year, and the Company's interest coverage ratio improved to 11.5 from 9.4, in the third quarter 2006 compared to 2005. Total funds available under Meritage's existing bank credit facility stood at $468 million at September 30, 2006, after considering the most restrictive covenants.

After-tax return on assets improved year-over-year to approximately 15.5% from 13.8%, and return on equity improved to approximately 35.9% from 33.6%, based on trailing four quarters' results this year compared to one year ago.

Full year 2006 outlook

"As we've stated previously and this quarter's results demonstrated, we expect sales and earnings trends will be weaker until cancellations normalize and stability returns to our markets," said Hilton. "Based on our reduced backlog, higher cancellations and slower order trends, we expect total revenue of $3.4-3.5 billion in 2006, and diluted EPS of $9.00-9.50. Additional write-offs of option deposits and inventory may be necessary if we experience further deterioration in market conditions or if we're unsuccessful renegotiating lot option contracts. Because of these uncertainties, we are not in a position to provide specific guidance for 2007 at this time. However, we believe we are armed with a strong balance sheet, confident in our strategy and leadership team, and committed to positioning Meritage to maximize future growth and stockholder returns."

Segment reporting

As shown in the table of "Operating Data," the Company has revised its reporting to present homebuilding operations in regional reporting segments. This has no effect on the Company's financial position, results of operations or cash flows for the periods presented. The Company is in the process of amending its Form 10-K for the year ending December 31, 2005, and Forms 10-Q for the quarters ended March 31 and June 30, 2006, to reflect this change. We believe these amendments and revised reporting format are consistent with changes being adopted by other public homebuilders.

Conference call and webcast

The Company will host a conference call Thursday, October 26, 2006, at 11 a.m. EDT to discuss the results of the quarter. The call will be webcast and accompanying materials will be accessible on the "Investor Relations" page of the Company's website at http://www.meritagehomes.com. The dial-in number is 866-700-7173, pass code "Meritage," and participants are encouraged to dial in five minutes before the call begins. A replay of the call will be available after 2 p.m. EDT October 26, 2006, through midnight November 25, 2006, by dialing 888-286-8010 and referencing pass code 62198634. The webcast replay will also be available on the "Investor Relations" page of the Company's website, and through CCBN for two weeks at www.fulldisclosure.com.



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

                         Three Months Ended       Nine Months Ended
                            September 30,           September 30,
                           2006       2005        2006         2005
                         --------   --------   ----------   ----------
 Operating results

 Home closing revenue    $875,743   $753,505   $2,624,968   $1,956,235
 Land closing revenue       2,453      1,945       15,159        3,954
                         --------   --------   ----------   ----------
   Total closing revenue  878,196    755,450    2,640,127    1,960,189

 Home closing
  gross profit            177,787    178,011      611,317      450,039
 Land closing
  gross profit                221         57        1,350          528
                         --------   --------   ----------   ----------
   Total closing
    gross profit          178,008    178,068      612,667      450,567

 Commissions and other
  sales costs             (55,934)   (39,635)    (156,810)    (106,975)
 General and
  administrative
  expenses (a)            (34,347)   (31,894)    (128,413)     (82,529)
 Other income, net          6,720      5,963       22,944       16,433
 Loss on extinguishment
  of debt                      --         --           --      (31,477)
                         --------   --------   ----------   ----------
 Earnings before
  provision for income
  taxes                    94,447    112,502      350,388      246,019
 Provision for income
  taxes                   (34,908)   (42,249)    (134,058)     (92,331)
                         --------   --------   ----------   ----------
 Net earnings            $ 59,539   $ 70,253   $  216,330   $  153,688
                         ========   ========   ==========   ==========
 Earnings per share
 Basic:
  Earnings per share     $   2.28   $   2.57   $     8.15   $     5.72
  Weighted average
   shares outstanding      26,087     27,311       26,554       26,880

 Diluted:
  Earnings per share     $   2.25   $   2.40   $     7.94   $     5.35
  Weighted average
   shares outstanding      26,490     29,217       27,259       28,748

Reconciliation to
 exclude one-time
 charge (b):

Earnings before
 provision for
 income taxes                                                 $246,019
Add: Loss on
 extinguishment
 of debt                                                        31,477
                                                            ----------
Adjusted amounts:
 Earnings before
  provision of income
  taxes                                                        277,496
 Provision for
  income taxes                                                (104,144)
                                                            ----------
 Net earnings                                               $  173,352
                                                            ==========
 Basic earnings
  per share                                                 $     6.45
 Diluted earnings
  per share                                                 $     6.03

 (a) The three- and nine-month periods ended September 30, 2006 include
     charges related to the adoption of SFAS 123R of $2.0 million 
     ($1.5M after-tax) and $9.3 million ($6.8M after-tax), respectively,
     plus severance and other employee departure-related costs of $1.1 
     million ($0.7M after-tax) and $12.8 million ($7.9M after-tax), 
     respectively.

 (b) The nine-month period ended September 30, 2005 includes a charge 
     of $31.5 million related to a series of refinancing transactions 
     that reduced after-tax net earnings by $19.7 million, or $.68 per  
     diluted share.


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

                              Three Months Ended     Nine Months Ended
                                 September 30,         September 30,
                                2006       2005       2006       2005
                                ----       ----       ----       ----
 EBITDA reconciliation:(a)
 Net earnings                $ 59,539     70,253   $216,330   $153,688
 Provision for income taxes    34,908     42,249    134,058     92,331
 Interest amortized to                                        
  cost of sales                12,508      9,514     32,787     27,025
 Depreciation and                                             
  amortization                  5,095      4,728     15,272     12,752
                             -----------------------------------------
 EBITDA                      $112,050   $126,744   $398,447   $285,796
                             =========================================


                                          As of and for Trailing
                                           Twelve Months Ended
                                               September 30,
                                           2006            2005
 EBITDA reconciliation:(a)                 ----            ----

 Net earnings                              318,307         205,500
 Provision for income taxes                202,287         124,476
 Interest amortized to cost of sales        44,558          37,872
 Depreciation and amortization              19,727          17,016
                                       ---------------------------
 EBITDA                                $   584,879     $   384,864
                                       ===========================
 Interest coverage ratio:(b)
 EBITDA                                $   584,879     $   384,864
 Interest incurred                          50,886     $    41,145
 Interest coverage ratio                      11.5             9.4

 Debt to EBITDA  ratio:(c)
 Notes payable and other borrowings    $   788,010     $   671,782
 EBITDA                                $   584,879     $   384,864
 Debt to EBITDA ratio                          1.3             1.7

 After-tax stockholder returns: (d)
 Net earnings                          $   318,307     $   205,500
 Average assets                        $ 2,055,190     $ 1,484,867
 Average equity                        $   886,617     $   612,410
 After-tax return on assets                   15.5%           13.8%
 After-tax return on equity                   35.9%           33.6%

 Net debt-to-capital: (e)
 Notes payable and other borrowings    $   788,010     $   671,782
 Less:  cash and cash equivalents          (75,436)        (40,185)
                                       ---------------------------
 Net debt                              $   712,574     $   631,597
 Stockholders' equity                      994,881         761,922
                                       ---------------------------
 Capital                               $ 1,707,455     $ 1,393,519
 Net debt-to-capital                          41.7%           45.3%

 (a) EBITDA is a non-GAAP financial measure and represents net
     earnings before interest expense amortized to cost of sales,
     income taxes, depreciation and amortization. A non-GAAP
     financial measure is a numerical measure of a company's
     historical or future financial performance, financial position
     or cash flows that excludes amounts, or is subject to adjustments
     that have the effect of excluding amounts, that are included in
     the most directly comparable measure calculated and presented in
     accordance with GAAP in the statement of earnings, balance sheet,
     or statement of cash flows (or equivalent statements) of the
     Company; or includes amounts, or is subject to adjustments that
     have the effect of including amounts, that are excluded from the
     most directly comparable measure so calculated and presented. In
     this regard, GAAP refers to generally accepted accounting
     principles in the United States. We have provided a
     reconciliation of this non-GAAP financial measure to the most
     directly comparable GAAP financial measure. 

     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 we believe it is a
     financial measure widely used 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.
    
 (b) Interest coverage ratio is calculated as the trailing four
     quarters' EBITDA divided by the trailing four quarters' interest
     incurred.

 (c) Debt to EBITDA ratio is calculated as notes payable and other
     borrowings divided by the trailing four quarters' EBITDA.

 (d) Return on assets is defined as net earnings for the trailing
     four quarters divided by the average of the trailing five
     quarters' ending total assets. Return on equity is defined as net
     earnings for the trailing four quarters divided by the average of
     the trailing five quarters' ending stockholders' equity for the
     same period.

 (e) 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

                          Balance Sheet Data
                       (In thousands, unaudited)

                                      September 30,    December 31,
                                          2006            2005
                                      ------------     -----------
 Total assets                         $  2,243,777     $ 1,971,357
 Real estate                             1,577,169       1,392,267
 Cash and cash equivalents                  75,436          65,812
 Total liabilities                       1,248,896       1,120,352
 Notes payable and other borrowings        788,010         592,124
 Stockholders' equity                      994,881         851,005

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

                           3rd Qtr                  Year-to-date
                  ------------------------    ------------------------
                     2006          2005          2006          2005
                  ----------    ----------    ----------    ----------
                  Beg.   End    Beg.   End    Beg.   End    Beg.   End
 Active           ---    ---    ---    ---    ---    ---    ---    ---
 Communities:
  California       26     27     22     18     20     27     18     18
  Nevada            6      5      6      6      6      5      6      6
                  ---    ---    ---    ---    ---    ---    ---    ---
  West Region      32     32     28     24     26     32     24     24

  Arizona          40     41     30     35     35     41     26     35
  Texas           113    121     98    101    108    121     89    101
  Colorado          5      5      1      4      3      5     --      4
                  ---    ---    ---    ---    ---    ---    ---    ---
  Central Region  158    167    129    140    146    167    115    140

  Florida(a)       14     14      6     10     12     14     --     10
                  ---    ---    ---    ---    ---    ---    ---    ---
  East Region      14     14      6     10     12     14     --     10
                  ---    ---    ---    ---    ---    ---    ---    ---
  Total           204    213    163    174    184    213    139    174
                  ===    ===    ===    ===    ===    ===    ===    ===

 (a) 2005 results for Florida include Colonial Homes and Greater
     Homes only since acquisition, in February and September 2005,
     respectively.


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

                       For the Three Months Ended September 30,
                            2006                     2005
                     -------------------       -------------------
                      Homes      Value         Homes       Value
                     ------     --------       ------     --------
 Homes Closed:
    California          382     $210,941          406     $244,703
    Nevada              177       70,282          138       52,980
                     ------     --------       ------     --------
   West Region          559      281,223          544      297,683

    Arizona             851      286,390          765      213,975
    Texas             1,063      247,926          879      197,926
    Colorado             36       13,121           --           --
                     ------     --------       ------     --------
   Central Region     1,950      547,437        1,644      411,901

    Florida(a)          127       47,083          122       43,921
                     ------     --------       ------     --------
   East Region          127       47,083          122       43,921
                     ------     --------       ------     --------
    Total             2,636     $875,743        2,310     $753,505
                     ======     ========       ======     ========
 Homes Ordered:
    California          304     $156,095          400     $236,709
    Nevada               68       28,444          165       66,791
                     ------     --------       ------     --------
   West Region          372      184,539          565      303,500

    Arizona             314       94,842          954      328,379
    Texas             1,148      292,595        1,318      304,346
    Colorado             34       13,324           31       11,048
                     ------     --------       ------     --------
   Central Region     1,496      400,761        2,303      643,773

    Florida(a)            2       (4,070)(b)       61       23,262
                     ------     --------       ------     --------
   East Region            2       (4,070)          61       23,262
                     ------     --------       ------     --------
    Total             1,870     $581,230        2,929     $970,535
                     ======     ========       ======     ========

                     -------------------------------------------------
                     As of and for the Nine Months Ended September 30,
                              2006                      2005
                     -----------------------   -----------------------
                        Homes       Value         Homes       Value
                     ----------   ----------   ----------   ----------
 Homes Closed:
     California           1,166   $  665,935        1,130   $  667,602
     Nevada                 538      213,544          292      109,662
                     ----------   ----------   ----------   ----------
    West Region           1,704      879,479        1,422      777,264

     Arizona              2,475      802,373        2,109      562,038
     Texas                3,090      719,396        2,452      538,110
     Colorado                89       32,849           --           --
                     ----------   ----------   ----------   ----------
    Central Region        5,654    1,554,618        4,561    1,100,148

     Florida(a)             528      190,871          209       78,823
                     ----------   ----------   ----------   ----------
    East Region             528      190,871          209       78,823
                     ----------   ----------   ----------   ----------
     Total                7,886   $2,624,968        6,192   $1,956,235
                     ==========   ==========   ==========   ==========
 Homes Ordered:
     California             832   $  455,308        1,437   $  844,942
     Nevada                 279      111,093          515      194,435
                     ----------   ----------   ----------   ----------
    West Region           1,111      566,401        1,952    1,039,377

     Arizona              1,504      520,127        2,852      914,374
     Texas                3,630      901,181        3,358      760,437
     Colorado                98       37,970           39       14,070
                     ----------   ----------   ----------   ----------
    Central Region        5,232    1,459,278        6,249    1,688,881

     Florida(a)             233       82,529          298      129,234
                     ----------   ----------   ----------   ----------
    East Region             233       82,529          298      129,234
                     ----------   ----------   ----------   ----------
     Total                6,576   $2,108,208        8,499   $2,857,492
                     ==========   ==========   ==========   ==========
 Order Backlog:
     California             380   $  210,337        1,002   $  568,611
     Nevada                  90       23,949          460      163,976
                     ----------   ----------   ----------   ----------
    West Region             470      234,286        1,462      732,587

     Arizona              1,456      556,456        2,734      889,723
     Texas                2,713      691,250        2,391      535,417
     Colorado                41       16,943           39       14,070
                     ----------   ----------   ----------   ----------
    Central Region        4,210    1,264,649        5,164    1,439,210
     Florida(a)             404      165,905          910      327,151
                     ----------   ----------   ----------   ----------
    East Region             404      165,905          910      327,151
                     ----------   ----------   ----------   ----------
     Total                5,084   $1,664,840        7,536   $2,498,948
                     ==========   ==========   ==========   ==========

 (a) 2005 results for Florida include Colonial Homes and Greater
     Homes only since acquisition, in February and September 2005,
     respectively.

 (b) Negative order represents the total value of orders cancelled
     exceeding the value of new orders taken this quarter.

About Meritage Homes Corporation

Meritage Homes Corporation (NYSE:MTH) is a leader in the homebuilding industry. The Company is ranked by Builder magazine as the 13th largest homebuilder in the U.S., is in the S&P SmallCap 600 Index, and has been perennially included on Forbes' "Platinum 400 - Best Big Companies in America", the Fortune 1000 and Fortune's "Fastest Growing Companies in America" lists. Meritage operates in many of the highest growth housing markets of the southern and western United States, including six of the top 10 single-family housing markets in the country during 2005, and has reported 18 consecutive years of record revenue and net earnings. For more information about the Company, visit www.meritagehomes.com. Meritage is a member of the Public Home Builders Council of America (www.phbca.org).

The Meritage Homes Corporation logo is available at http://www.primezone.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 our expected revenue and diluted earnings per share for 2006, our expected lot reductions through year-end 2006, other tactical adjustments we may undertake in response to weaker market conditions, and that additional asset write-offs may become necessary. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, to update or revise 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, pace of sales orders, cancellation rates and home prices in our markets; potential for write-downs or write-offs of assets or deposits; interest rates and changes in the availability and pricing of residential mortgages; a decline in housing affordability; our success in locating and negotiating favorably with possible acquisition candidates; the success of our program to integrate existing operations with any new operations or those of past or future acquisitions, including Colonial Homes of Florida and Greater Homes, Inc.; our increased investments in land acquisitions and development joint ventures; our dependence on key personnel and the availability of satisfactory subcontractors; our ability to take certain actions because of restrictions contained in the indentures for our senior 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 inflation; the impact of construction defect and home warranty claims; the strength and competitive pricing of the single-family housing market; 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, particularly in our start-up markets; 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, 2005, and our Form 10-Q for the quarter ended June 30, 2006, under the caption "Risk Factors." As a result of these and other factors, the Company's stock and note prices may fluctuate dramatically.



        

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