Please ensure Javascript is enabled for purposes of website accessibility

Why Meritage Homes Stock Dropped Today

By Joe Tenebruso - Updated Mar 9, 2020 at 9:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Recession fears are taking hold.

What happened

Shares of Meritage Homes (MTH 1.15%) fell nearly 15% on Monday, as the U.S. economy suffered more serious setbacks.

So what

Oil prices plummeted more than 20% after OPEC failed to reach a deal to reduce oil production. Many oil stocks plunged in response, amid widespread fear that lower oil prices could lead to a slew of bankruptcies in the industry. Combined with fears surrounding the rapidly growing number of cases of COVID-19 -- the disease caused by the novel coronavirus -- in the country and around the world, this calamity in the energy sector drove a staggering 7.6% decline in the S&P 500 on Monday.

Many homebuilder stocks took were hit hard, as concerns mount that the U.S. economy will fall into a recession.

A person looking at a miniature home while holding his chin in a pensive manner.

A downturn in the economy could lead to fewer new home sales. Image source: Getty Images.

Now what

Despite these risks, there is a silver lining to recent events. Investors seeking safety have driven interest rates on U.S. Treasuries sharply lower in recent days. Mortgage rates are based in part on these rates, so it's now significantly cheaper for many people to buy a home. That could help offset a decline in demand for new homes brought about by a downturn in the economy -- and potentially help stabilize Meritage Homes' business.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Meritage Homes Corporation Stock Quote
Meritage Homes Corporation
$74.66 (1.15%) $0.85

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.