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Meritage CEO Sees a Sustainable Housing Recovery

Saturday, 28 Jul 2012 | 5:08 PM ET

The nascent U.S. housing recovery looks sustainable, Meritage Homes CEO Steven Hilton, told CNBC’s “Street Signs”on Friday.

Home Construction
Lee Coursey
Home Construction

“We’re having a great success in some of the hardest-hit markets that are really recovering the fastest,” Hilton said.

Meritage , which builds homes in the western and southern U.S., is seeing markets like Phoenix, Northern California, Southern California, Colorado and Florida “really picking up some steam,” Hilton said.

With 49 percent order growth for the second quarter, Hilton said the company hasn't been able to keep up with demand. (Related: Housing a Bright Spot Sell the News?).

In its earnings release, Meritage said California showed the strongest demand, with nearly three times the number of orders in the second quarter of 2012 as compared to 2011.

Meritage has also been building more spec homes than they usually do “because a lot of renters are becoming homeowners and they don’t want to wait to have a home built,” Hilton noted. Spec homes are those that the homebuilder constructs with the expectation that someone will eventually buy it. (Related: Priciest Cities to Rent).

Meritage Homes Hits 5-Year High
Steven Hilton, Meritage Homes CEO, explains why the company's stock is booming.

Hilton also said that mortgages for homebuyers looking to move up into a new house are easy to find if borrowers have a job and a decent credit score. But it is harder for entry-level homebuyers, who typically have lower credit scores, Hilton noted.

Pricing power is also starting to return. “In California and Arizona we’ve had a lot of pricing power,” Hilton said. “We raised prices 5 to 10 percent in the last quarter.”

“In other markets like Texas it’s been a bit more tempered,” he said.

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