What Happened?
Shares of homebuilder Meritage Homes (NYSE: MTH) fell 3% in the morning session after the announcement of significant new tariff threats against major U.S. trading partners, sparking investor fears over rising construction costs and pressure on profit margins.
Over the weekend, the White House announced potential new tariffs of 35% on Canadian imports and 30% on both the European Union and Mexico, slated to take effect by August 1st if new trade agreements are not reached. This news sent a chill through the broader market, with pre-market futures trading notably lower on Monday morning. For homebuilders like Meritage Homes, the prospect of steep tariffs is particularly concerning. The construction industry relies heavily on imported materials, and such levies could significantly increase the cost of goods, squeezing profitability. These increased costs could either be absorbed by the company, hurting earnings, or passed on to consumers through higher home prices, which could dampen demand in an already sensitive housing market.
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What Is The Market Telling Us
Meritage Homes’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Meritage Homes is down 5.1% since the beginning of the year, and at $72.14 per share, it is trading 32.5% below its 52-week high of $106.85 from September 2024. Investors who bought $1,000 worth of Meritage Homes’s shares 5 years ago would now be looking at an investment worth $1,814.
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