What happened
Shares of online real estate platform Redfin (RDFN 8.49%) were down 12% as of 3:57 p.m. ET Thursday following a worrisome update on U.S. existing home sales from the National Association of Realtors (NAR).
So what
As a leading online real estate brokerage platform, Redfin is obviously sensitive to negative developments and continued headwinds in the real estate market.
According to a new report released by the NAR on Thursday, sales of previously owned homes were down 15.3% year over year and 0.7% sequentially in August to an annual rate of 4.04 million units. Meanwhile, the median price of an existing home increased 3.9% year over year to $407,100. Inventories also continued to fall, with homes for sale at the end of August down 14.1% year over year and 0.9% sequentially from the previous month in August, to 1.1 million homes.
Now what
"Home prices continue to march higher despite lower home sales," explained NAR Chief Economist Lawrence Yun. "Supply needs to essentially double to moderate home price gains."
It certainly didn't help that the broader market simultaneously fell hard today, with both the S&P 500 and Nasdaq Composite indexes down around 1.5% as of this writing. For that, we can partly blame yesterday's news that while the U.S. Federal Reserve will hold interest rates steady this month at a range between 5.25% and 5.5%, a majority of officials at the central bank continue to expect at least one more quarter-point rate hike before the end of 2023.
For now, it seems a foregone conclusion that headwinds facing Redfin's core business won't abate in the near future. Its share price is simply responding in kind.
