Redfin Corp Stock Price, News & Analysis

Redfin's latest Homebuyer Demand Index indicates a slight 1% drop from last week, as rising mortgage rates, approaching 7%, negatively impact buyer demand. Mortgage-purchase applications fell by 6% from the previous week, continuing a trend of low inventory and high sensitivity among sellers to interest rates. Although the median home sale price rose marginally to $346,725, asking prices are increasing at the slowest pace since the pandemic. Despite pending sales being down 18% year-over-year, they show improvement compared to the 33% decline in November. Strong demand exists for well-priced homes in desirable neighborhoods.

Redfin Corporation (NASDAQ: RDFN) reported its fourth quarter and full year results for 2022. Fourth quarter revenue was $479.7 million, down 25% year-over-year, with a gross profit of $37.4 million, a 65% decline. The net loss reached $61.9 million, worsening from a $27.0 million loss in the same quarter of 2021. For the full year, revenue increased 19% to $2,284.4 million, but gross profit fell 29% to $286.1 million. The annual net loss was $321.1 million, compared to $109.6 million in 2021. Redfin aims for $200 million in adjusted EBITDA improvement in 2023, driven by digital revenue growth and reduced costs.

Redfin reports that in December, cash purchases accounted for 31.2% of U.S. home sales, slightly down from November's 31.9%, but up from 28.8% a year prior. High mortgage rates averaging 6.36% have made cash purchases attractive. Meanwhile, FHA loans composed 15.6% of mortgaged sales, the highest since May 2020. VA loans also saw an increase, reaching 7.1%. The prevalence of cash purchases and FHA loans reflects shifting market dynamics as buyers adapt to elevated rates and changing competition levels.

In Q4 2022, investor home purchases in the U.S. plummeted by 45.8% year-over-year, marking a record decline due to rising borrowing costs and anticipated home-price drops. The total value of investor purchases fell to $31 billion, which is 42.7% lower than the previous year. Las Vegas and Phoenix witnessed the largest declines in investor activity, at 67% and 66.7% respectively. Overall U.S. home purchases decreased 40.8% from the previous year, with only 17.8% of homes bought by investors in tracked metros, compared to 19.4% a year earlier. The report indicates a cautious investor sentiment amid expectations of falling property values.

In January, the median U.S. asking rent rose 2.4% year-over-year to $1,942, marking the smallest increase since May 2021. This is a significant slowdown compared to January 2022's 15.6% rise. Rental prices dropped 1.9% month-over-month and are down 5.4% from August 2022's peak of $2,053. Key reasons for cooling rent growth include high costs, inflation, and increased supply from new construction and rental properties. Notably, Phoenix and Oklahoma City experienced year-over-year rent declines of 6.7% and 6.3%, respectively. The slowing rent growth is expected to help ease inflation for young adults signing new leases.

Homebuyer demand is recovering despite rising mortgage rates, as reported by Redfin (NASDAQ: RDFN). During the four weeks ending February 5, pending home sales declined by only 20%, the smallest decrease since September. Mortgage-purchase applications saw a 3% week-over-week rise. The Homebuyer Demand Index reached its highest level since September. New listings fell by 17%, marking the smallest decline in over four months. Although mortgage rates increased to 6.12%, they remain down from late 2022 peaks. Redfin continues to observe changing dynamics in the housing market, influenced by the Federal Reserve's interest rate policies and economic factors.

Redfin (NASDAQ: RDFN) reports that Gen Z and millennial renters are experiencing lower personal inflation rates compared to the general U.S. population for the first time since late 2020. In December, Gen Z renters faced a 5.6% inflation rate, while millennials saw 6.1%, both below the U.S. average of 6.5%. The slowdown in rental price growth, with a 4.8% median increase in December—the smallest in 18 months—has contributed to this trend. Demand for rentals has decreased, coupled with rising supply, allowing for better negotiating power for new lease signers. Economists suggest potential benefits for those considering renting or buying homes in this evolving market.

Redfin (RDFN) reports a notable increase in homebuyer activity as mortgage rates fall below 6%, allowing buyers with a $2,500 monthly budget to afford homes priced up to $400,000. For the week ending February 2, the average mortgage rate dipped to 5.99%, marking the first sub-6% rate since September. Pending home sales have shown improvement, with a decrease of only 23% year-over-year, the smallest drop in four months. New home listings also declined 17% year-over-year, but this is the smallest decline in four months. Redfin's Homebuyer Demand Index shows a 19% uptick from previous lows, indicating an ongoing recovery in the housing market.

Redfin Corporation (NASDAQ: RDFN) will announce its fourth-quarter 2022 results on February 16, 2023, after market close. A live webcast to discuss these results will take place at 1:30 p.m. PT / 4:30 p.m. ET. Investors can access the webcast on Redfin's Investor Relations website. Redfin is a technology-driven real estate company, established in 2006, providing services in brokerage, rentals, lending, title insurance, and renovations. It operates in over 100 U.S. and Canadian markets, employing over 5,000 people and has saved customers more than $1 billion in commissions.