Meritage Homes Achieves 18th Consecutive Record Year with $3 Billion Revenue; Also Reports Record Closings, Orders and Backlog Reaffirms Guidance for 2005

-- ANNUAL RECORDS

-- CLOSED 9,406 HOMES IN 2005 FOR $3.0 BILLION, UP 49% OVER 2004

-- YEAR-END BACKLOG INCREASES 65% TO $2.2 BILLION

-- NEW HOME ORDERS OF $3.6 BILLION, UP 37%

-- QUARTERLY RECORDS

-- $1.0 BILLION REVENUE FROM 3,214 HOMES CLOSED IN 4TH QUARTER 2005

-- RECORD FOURTH QUARTER ORDER VALUE OF $723 MILLION, UP 8%

Meritage Homes Corp. (NYSE: MTH) today announced quarterly andannual records for the number and Dollar value of homes sold and homesclosed during the fourth quarter and full year 2005. In addition,Meritage reported a record-setting year-end backlog, capping anotheryear of strong performance.
Summary Operating Results

For the Three Months Ended Dec. 31,
(unaudited)
-------------------------------------------
$ Millions Homes
------------------- -------------------
% %
2005 2004 Chg 2005 2004 Chg
------- ----- --- ------ ------ ---
Homes ordered $723 $670 8% 2,072 2,055 1%
Homes closed $1,041 $698 49% 3,214 2,394 34%
Order backlog
---------------------------------------------------------------------

As of and for the Years Ended Dec. 31,
(unaudited)
---------------------------------------------
$ Millions Homes
--------------------- --------------------
% %
2005 2004 Chg 2005 2004 Chg
------- ------- --- ------- ------ ---
Homes ordered $3,581 $2,605 37% 10,571 9,007 17%
Homes closed $2,997 $2,016 49% 9,406 7,254 30%
Order backlog $2,182 $1,321 65% 6,394 4,408 45%
----------------------------------------------------------------------

Meritage closed 3,214 homes with a total value of $1.0 billion inthe fourth quarter 2005, representing unit growth of 34% and revenuegrowth of 49% over the same period 2004, and setting all-timequarterly records for the company.

For the full year 2005, Meritage closed 9,406 homes with anaggregate value of $3.0 billion, representing unit growth of 30% andrevenue growth of 49% over 2004. Average sales prices increased by 15%on homes closed and 17% on homes ordered during the year, reflectingboth price appreciation and a mix shift toward higher priced markets.Year-end backlog of homes to be delivered grew 65% to $2.2 billion, asa result of orders outpacing deliveries, higher average selling pricesand the two acquisitions in Florida during 2005.

"We are extremely pleased to report another record-breakingquarter and year for Meritage," said John R. Landon, Meritageco-chairman and CEO. "We achieved records in home closing revenue andsales order value during the fourth quarter, and delivered our 18thconsecutive year of record home closing revenue. Given our higherbacklog value and Meritage's competitive position in our markets, webelieve we will continue to achieve future growth and profitability."

Based on these results, the company reiterated expectations for2005 diluted EPS of $8.25 to $8.50, up 64% to 69% over 2004. Excludinga one-time bond refinancing charge of $0.69(a) per share incurredduring the first quarter of 2005, current year diluted EPS guidancewould be $8.94 to $9.19, which would be 78% to 83% higher than 2004.The company also anticipates fourth quarter 2005 diluted EPS toapproximate $2.88 to $3.13, an increase of 53% to 66% over the prioryear's fourth quarter. (a) First quarter 2005 bond refinancing chargeis related to repurchasing $276.8 million of our 9.75% senior notesdue 2011. The funds to repurchase these bonds came from our new $350.0million 6.25% senior notes due 2015. This bond refinancing chargereduced pre-tax earnings by $31.3 million, reduced net earnings by$19.5 million and reduced diluted EPS by $0.69.

The company achieved strong growth in orders during 2005, althoughfourth quarter gains were relatively modest, with units ahead only 1%compared to a 17% gain for the full year, and dollar value up 8%compared to a 37% gain for the full year. The fourth quarter resultsreflect slowing from the unusually robust sales pace seen in previousquarters in the northern California and Nevada markets, causing unitorders to fall year over year by 52% in California and 13% in Nevada.Comparisons to last year are difficult considering the extremelystrong fourth quarter 2004 results, when unit orders surged by 84% inCalifornia, 56% in Nevada and 79% overall. Management expects salesrates per community in California and Nevada to return to the morenormal and sustainable levels seen in 2003 and 2002.

"Combined sales in our Meritage Phoenix and Monterey Scottsdaledivisions remained strong, up 23% year over year in the fourthquarter, and despite some softness in our Tucson market, we nearlymatched Arizona's unusually strong fourth quarter 2004, when ordersincreased 105% over fourth quarter 2003," said Steven J. Hilton,Meritage co-chairman and CEO. "In addition, the company recorded asolid 22% increase in unit orders in our Texas division, continuing animproving trend there and reflecting particular strength in ourAustin, Houston and San Antonio markets."

Total active communities in which Meritage is selling homes grewfrom 139 to 184 over the course of 2005, with new communities thathave opened in Texas and Arizona accounting for nearly three-quartersof this net increase. Meritage added 15 communities in Florida andColorado during 2005, through acquisitions or startup operations,generating additional growth for the company.

Meritage plans to hold its earnings call on Thursday, Jan. 26,2006, at 10 a.m. CST/11 a.m. EST. To participate in the call, pleasedial in at least five minutes before the start time. The domesticdial-in number for the call is 800-291-3314, and the internationaldial-in number is 706-634-0844, conference ID#4085294. The conferencecall and presentation can be accessed through the company's Web siteat www.meritagehomes.com. The call may also be accessed through CCBNfor two weeks at www.fulldisclosure.com. A replay of the call will beavailable from 12 p.m. EST, Jan. 26, 2006, through midnight Feb. 1,2006. The domestic replay telephone number is 800-642-1687, and theinternational replay telephone number is 706-645-9291.

About Meritage Homes Corp.

Meritage Homes Corp. is one of the nation's largest homebuilders.The company has been on Forbes' "Best Big Companies" list for threeyears, Fortune's "Fastest Growing Companies in America" list five ofthe last seven years, and is included in the S&P SmallCap 600 Index.Additionally, Fortune ranked Meritage 747th in its "Fortune 1000" listof America's largest corporations and included the company as a "toppick from 50 great investors" in its Investor's Guide 2004. Meritageoperates in fast-growing states of the southern and western UnitedStates, including six of the top 10 single-family housing markets inthe country, and has now reported 18 consecutive years of recordrevenue. For more information about the company, please visit theMeritage Web site located at www.meritagehomes.com.
Meritage Homes Corp. and Subsidiaries
Operating Data -- Unaudited
($ in thousands)

For the Three Months Ended Dec. 31,
2005 2004
---- ----

Homes $Value Homes $Value
------ ----------- ------ ---------
Homes Ordered:
Texas 906 $223,111 744 $159,041
Arizona 706 260,078 713 195,030
California 209 132,200 439 260,025
Nevada 138 54,537 159 55,788
Florida 112 52,934 - -
Colorado 1 561 - -
------ ----------- ------ ---------
Total 2,072 $723,421 2,055 $669,884
====== =========== ====== =========


Homes Closed:
Texas 1,124 $249,063 981 $211,390
Arizona 1,013 311,099 917 244,760
California 497 279,847 399 206,795
Nevada 249 92,113 97 35,309
Florida 323 105,838 - -
Colorado 8 2,809 - -
------ ----------- ------ ---------
Total 3,214 $1,040,769 2,394 $698,254
====== =========== ====== =========

Order Backlog:
Texas
Arizona
California
Nevada
Florida(b)
Colorado
Total


Meritage Homes Corp. and Subsidiaries
Operating Data -- Unaudited
($ in thousands)

As Of and For the Years Ended Dec. 31,

2005 2004
---- ----

Homes $Value Homes $Value
------- ----------- ------ -----------
Homes Ordered:
Texas 4,264 $983,548 3,518 $752,770
Arizona 3,558 1,174,452 3,490 884,771
California 1,646 977,142 1,582 821,266
Nevada 653 248,972 417 146,141
Florida 410 182,168 - -
Colorado 40 14,631 - -
------- ----------- ------ -----------
Total 10,571 $3,580,913 9,007 $2,604,948
======= =========== ====== ===========

Homes Closed:
Texas 3,576 $787,173 3,152 $681,099
Arizona 3,122 873,137 2,331 585,743
California 1,627 947,449 1,367 628,324
Nevada 541 201,775 404 120,576
Florida 532 184,661 - -
Colorado 8 2,809 - -
------- ----------- ------ -----------
Total 9,406 $2,997,004 7,254 $2,015,742
======= =========== ====== ===========

Order Backlog:
Texas 2,173 $509,465 1,485 $313,090
Arizona 2,427 838,702 1,991 537,387
California 714 420,964 695 391,271
Nevada 349 126,400 237 79,203
Florida(b) 699 274,247 - -
Colorado 32 11,822 - -
------- ----------- ------ -----------
Total 6,394 $2,181,600 4,408 $1,320,951
======= =========== ====== ===========

(b) As part of our February 2005 acquisition of Colonial Homes of
Florida, we purchased order backlog of 367 homes with a value of
approximately $130 million, and as part of our September 2005
acquisition of Greater Homes, we purchased order backlog of 454 homes
with a value of approximately $147 million.

This press release contains forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995. Suchstatements include statements concerning our expectations forcontinued growth and profitability, anticipated diluted EPS for thefourth quarter and full year 2005, and that sales rates per communityin California and Nevada will return to more normal and sustainablelevels. Such statements are based upon the current beliefs andexpectations of our management and are subject to significant risksand uncertainties. Actual results may differ from those set forth inthe forward-looking statements.

Meritage's business is subject to a number of risks anduncertainties including: interest rates and changes in theavailability and pricing of residential mortgages; our success inlocating and negotiating favorably with possible acquisitioncandidates; the success of our program to integrate existingoperations with any new operations or those of past or futureacquisitions, including Colonial Homes of Florida and Greater Homes;our dependence on key personnel and the availability of satisfactorysubcontractors; our ability to take certain actions because ofrestrictions contained in the indentures for our senior notes and theagreement for our unsecured credit facility; our lack of geographicdiversification; the cost and availability of insurance, including theunavailability of insurance for the presence of mold; our potentialexposure to natural disasters; the impact of inflation; the impact ofconstruction defect and home warranty claims; the strength andcompetitive pricing of the single-family housing market; demand forand acceptance of our homes; changes in the availability and pricingof real estate in the markets in which we operate, our ability toacquire additional land or options to acquire additional land onacceptable terms, particularly in our start-up markets; generaleconomic slow downs; consumer confidence, which can be impacted byeconomic and other factors such as terrorism, war, or threats thereofand changes in energy prices or stock markets; our level ofindebtedness and our ability to raise additional capital when and ifneeded; legislative or other initiatives that seek to restrain growthor new housing construction or similar measures and other factorsidentified in documents filed by us with the Securities and ExchangeCommission, including those set forth in our Form 10-K for the yearended Dec. 31, 2004 under the caption "Management's Discussion andAnalysis of Financial Condition and Results of Operations - FactorsThat May Affect Our Future Results and Financial Condition" and inExhibit 99.1 of our Form 10-Q for the quarter ended Sept. 30, 2005. Asa result of these and other factors, the company's stock and noteprices may fluctuate dramatically.