What happened

The stock market -- especially when it comes to technology stocks -- was having a good day on Wednesday. As of 12:30 p.m. ET, the tech-heavy Nasdaq was higher by about 0.7%.

However, shares of several technology-focused real estate stocks were significantly outperforming. Leading iBuyer Opendoor Technologies (OPEN 1.50%) was up by 7% during this time after rising by double digits earlier in the day, while brokerage disruptor Redfin (RDFN 3.87%) was 13% higher.

So what

These moves can likely be attributed to two main factors: strong results and investor optimism about real estate.

Let's start with the recent results from these two businesses. Opendoor reported its earnings last Thursday, and the company is making impressive progress in selling its "old book" of homes. In simple terms, Opendoor dramatically overpaid for much of the inventory it purchased before the second half of 2022. The company beat expectations on both the top and bottom lines.

Redfin also reported earnings late last week, and the company has been able to wind down its RedfinNow iBuying business faster than expected (it only owned five homes at the end of the first quarter and used the proceeds to pay down $300 million of its debt). Its quarterly loss was better than expected, and management believes the company can achieve profitability next year.

Now what

This begs the question: If both companies reported earnings last week, why are their stock prices rising today? The answer is that recent economic data could be a good sign that the housing market is set to recover as 2023 goes on.

Today's CPI report showed that inflation rose 4.9% year over year, which was less than experts had been expecting. Investors seem to be interpreting the news as that the Federal Reserve's rate hikes are working, and that there may not need to be any further upward adjustments.

For housing, there are two effects. For one thing, while housing costs are up 8.1% year over year, the gains are cooling down, and housing costs are expected to actually decline in coming months. This is a positive catalyst for home affordability.

More significantly, today's cooler-than-expected inflation number caused interest rates to fall. For example, the 10-year Treasury yield (which usually moves in the same direction as mortgage rates) declined by seven basis points on the news.

In short, a combination of stable prices and lower mortgage rates should translate to a higher level of activity in the housing market. And that's especially true is it's combined with a low unemployment rate, as the recent payroll report seemed to suggest.