Shares of Redfin (RDFN -0.16%) were surging today after the online real estate brokerage showed signs of a recovery in its third-quarter earnings report even though the business is still struggling with high mortgage rates and a weak housing market.

As a result, the stock was up 26.2% as of 11:09 a.m. ET.

Is Redfin turning the corner?

Redfin's revenue continued to decline in the quarter, falling 12% to $269 million, which was below estimates at $271 million. However, gross profit, which is a more important figure for the company, rose 8% to $98.3 million, showing it's doing a better job of converting revenue into profits before overhead costs.

The company also returned to market share gains with 0.78% of existing home sales, up from 0.75% in the second quarter. Additionally, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved from a loss of $46.3 million to a profit of $7.7 million, again showing progress in profitability despite the macro challenges.

On the bottom line, it reported a generally accepted accounting principles (GAAP) loss of $19.3 million, or $0.17 a share, which was better than the consensus at $0.20.

CEO Glenn Kelman said, "In a worsening housing market, Redfin earned an adjusted EBITDA profit, a $59 million improvement over the third quarter of 2022, all while growing traffic and gaining share."

What's next for Redfin?

Looking ahead, the company sees fourth-quarter revenue of $211 million to $226 million, representing a range of negative 5% to 2% in revenue growth. It also called for a net loss of $18 million to $27 million and an adjusted EBITDA loss of $9 million to $19 million. That revenue forecast was worse than the consensus at $242 million.

Redfin is making progress back toward revenue growth, and the company also seems to be benefiting from the perception that the Federal Reserve is done raising interest rates as the stock jumped yesterday as well.

Redfin shares are still down more than 90% from their pandemic-era peak, which, along with the challenges in the housing market, should help ensure that the stock remains volatile. Still, it should benefit from the eventual recovery in the housing market, though that could take years.