Shares of tech-focused real-estate firm Redfin Corp. and online home-buying platform Opendoor Technologies Inc. were hit hard on Friday, after both companies a day earlier gave weaker-than-expected sales outlooks, as the housing market remains frozen in place.
stock was down 21.8%, putting it on pace for its third-worst percentage drop since its IPO. Shares of Opendoor
had fallen around 20.9%, on track for its second-worst.
The hasty retreat for investors comes as stubbornly high mortgage rates and a shortage of available homes keeps prices high and out of reach for prospective home buyers, weighing on demand. Both Redfin and Opendoor have faced steep layoffs, or at least reports of steep layoffs, over the past 12 months.
Redfin on Thursday said it expected third-quarter revenue of between $265 million and $279 million. That was below FactSet forecasts for $280 million. Opendoor, meanwhile, said it expected third-quarter sales of $950 million to $1 billion, compared with FactSet estimates for $1.19 billion.
“We do not anticipate any significant change in the housing market through the second half of 2023,” Redfin Chief Executive Glenn Kelman said on the company’s earnings call on Thursday, in response to an analyst question on the state of the housing market.
“You’re absolutely right that high rates are going to limit the amount of inventory available for sellers and for buyers,” he continued. “Affordability is just going to be a huge issue.”
Redfin on Thursday also said it lost market share in its most recent quarter, and that it would take longer to break even. Company executives attributed the shrinking market share to “one-time setbacks from agent layoffs and the closure of RedfinNow,” a segment of Redfin that bought homes and then resold them. Redfin began winding down that segment in November.
Still, executives at both companies tried to steer Wall Street toward the positives. Redfin said it expected to “return to quarter-over-quarter gains in the second half, as Redfin.com has been competing better for traffic.”
Opendoor Chief Executive Carrie Wheeler, during the company’s earnings call on Thursday, also said the company had taken steps to manage costs and risk.
“In navigating the current environment, we’re leveraging the lessons we’ve learned and focusing on what we can control,” she said.