Please ensure Javascript is enabled for purposes of website accessibility

Redfin Posts 5% Year-Over-Year Growth in Q4 as Home Supply Shortage Continues

By Nicholas Rossolillo - Feb 24, 2021 at 6:21PM

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

The tech-enhanced low-cost real estate broker is forecasting a return to double-digit growth in Q1 2021.

Tech-powered residential real estate broker Redfin (RDFN -2.71%) said its fourth-quarter 2020 revenue increased 5% year over year to $244.5 million -- well ahead of its estimate for $226 million to $233 million provided a few months ago. Full-year 2020 revenue ended 14% higher to $886.1 million as Americans moved out of the densest cities and into the suburbs during the pandemic.

A stubborn housing shortage

Redfin's results in the second half of 2020 were held in check because of a nationwide shortage in homes for sale. CEO Glenn Kelman said on the quarterly conference call that RedfinNow -- its segment that buys and sells homes directly from homeowners versus acting as a broker, and which competes with Opendoor Technologies (OPEN -0.72%) -- was primarily responsible for holding back growth. Redfin has also been dealing with a shortage of agents to assist home buyers and is in an ongoing effort to recruit. This agent shortfall is expected to last until summer 2021.

A couple moving boxes into a kitchen.

Image source: Getty Images.

However, the company sees a return to double-digit sales growth to kick off the new year as RedfinNow activity increases again. Management expects Q1 revenue to be $249 million to $255 million, up 30% to 34% from the same period last year. RedfinNow will expand to new cities, its in-house mortgage business is growing by a triple-digit rate, and marketing of Redfin's website and tech-enabled agents will continue in the new year and help offset challenges related to housing supply. 

A few days before the Q4 earnings announcement, Redfin said it entered an agreement to acquire RentPath for $608 million. The parent of,, and, RentPath's sites will slowly be integrated into Redfin's leading brokerage and property search platform. This pending purchase hasn't been included in guidance yet.  

Redfin is saving consumers money and making the home buying and selling process more easy and transparent. The company's results will fluctuate with the cyclical nature of the residential real estate industry, but this growing real estate broker remains a promising long-term fintech stock.

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

Redfin Corporation Stock Quote
Redfin Corporation
$10.43 (-2.71%) $0.29
Opendoor Technologies Inc. Stock Quote
Opendoor Technologies Inc.
$6.85 (-0.72%) $0.05

*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 service.

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 05/21/2022.

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.