Redfin shares sink after warning US housing market slowdown could last for months

Redfin Corp (NASDAQ:RDFN) shares crumbled on Friday after the chief executive of the real estate brokerage said the sharp slowdown in the US housing market could persist for months.

Redfin Chief Executive Glenn Kelman said in a conference call after results were released Thursday that there had been “an unexpected drop in Redfin’s bookings growth in the past three weeks, slowing traffic growth in a weakening real-estate market.”

“For the first time in years, we are getting reports from managers of some markets that home buyer demand is waning, especially in some of Redfin’s largest markets,” Kelman said. He pointed to Seattle, Washington, Portland, Oregon, and San Jose, California where the inventory remained tight but was not boosting prices higher. 

Redfin shares dropped 15.7% to US$19.50 during early trading on Friday.  

Redfin had reported on Thursday that revenue in the second quarter climbed to US$142.6mln, beating analyst expectations it would reach US$141.2mln. The year-ago revenue figure was at US$109.5mln. 

A monthly index by Redfin showed that housing demand fell 9.6% in June, the largest such fall since April 2016. A rise in both housing prices and the mortgage rate has weakened affordability. The housing market is a bedrock of the US economy, and the subprime mortgage crisis in 2008 was the prime trigger for the recession then.

Contact Rene Pastor at [email protected]

Story by ProactiveInvestors