What happened

An apparently cooling U.S. housing market was making investors cool on Redfin (RDFN -5.58%) shares Tuesday. The company's stock price fell by over 8% on the day as a result, a far steeper decline than the modest one posted by the S&P 500 index.

So what

Well before market open that morning, Redfin published its latest piece of research on the domestic market, and its key finding was sobering.

Specifically, it was that the share of homes listed for at least 30 days without going under contract rose by almost 13% on a year-over-year basis in July. All told during the month, just over 61% of homes for sale were on offer for 30 days or more. The July 2021 figure was slightly more than 54%.

It wasn't only the numbers that were a source of concern. Redfin added that this was its first recorded uptick in so-called "stale" housing since the start of the coronavirus pandemic. It's also the second-highest increase since the company started compiling such real estate data, eclipsed only by April 2020's 13.9% rise.

In Redfin's estimation, this development is "a reflection of the housing market slowing in response to 5%-plus mortgage rates and a shaky economy." That, in turn, derives from the Federal Reserve's recent and rapid hiking of key interest rates, an attempt to combat the recent rise of inflation.

Now what

While Redfin's finding isn't particularly shocking given those recent developments, it's hardly good news for the company. As an online real estate brokerage, the health of the company is highly dependent on the state of the domestic housing market. Investors, then, should closely monitor the trajectory of that market in the coming weeks and months, not to mention the signals the Fed is sending about more potential rate hikes.