What happened
Shares of RE/MAX Holdings (RMAX -2.08%) fell as much as 18.8% in trading on Friday after the company reported fourth-quarter 2022 financial results. Shares closed the day down 13.5%.
So what
Revenue fell 8.9% to $81.3 million and the company swung from net income of $3.1 million a year ago to a loss of $2.6 million, or $0.14 per share.
A sharp drop in broker fees from $16.8 million to $11.9 million was the biggest reason for the loss. The housing market's sales volume has cratered as interest rates rose and fewer buyers were able to afford high house prices.
There have been some signs that the market is picking up, like a 59.4% increase in listings in January versus a year ago, according to a recent RE/MAX report. But sales were down 26.7% as buyers don't fill the new supply of homes on the market.
Now what
The housing market has a long way to go before it gets to any kind of stable point. You can see from the data above that sellers are getting back into the market, but they're likely listing homes for too high a price for today's interest rates.
Higher rates mean people can buy less home for the same monthly payment and prices need to come down as a result. But the sticky nature of housing means the adjustment can take time and in the meantime, RE/MAX will feel the pain in its earnings.
