Seattle-based online real estate giant Redfin missed expectations for the second quarter amid a slowing housing market impacted by rising mortgage rates.
Revenue of $606.9 million, up 29% from the same period a year, missed expectations of $611.37 million from analysts and $613 million by its own projections. This is the first time in five years as a public company that Redfin missed its revenue projections.
Net loss increased to $78.1 million, from $27.9 million a year earlier.
Redfin CEO Glenn Kelman said the housing market “took a turn for the worse in the second quarter” but still expressed optimism for the company’s business.
“There will be more market ups and downs in the road ahead, but our whole engine to drive traffic, brokerage share, customer value and monetization is running more efficiently than ever,” he said in a statement.
Redfin announced in June that it was cutting about 8% of its workforce, citing “market conditions” as its reasons for the cuts. Demand for Redfin was down 17% in May, the company said at the time.
The amount of signed contracts to purchase existing homes dropped 20% in June compared to the same month last year, according to the National Association of Realtors. The association expects home sales to be down 13% for the year, but that it will rise again in early 2023.
Redfin’s website and app traffic rose 9% to about 53 million average monthly users.
Mortgage revenue rose to $53 million, up from $2.9 million last quarter. The company has been growing that arm of its business since acquiring Bay Equity Home Loans for $135 million on April 1, which came at the end of last quarter. The total attach rate of Redfin customers also getting a mortgage has grown to 15%, up from previous highs of 8%.
Redfin said it sold 423 homes through its RedfinNow “iBuyer” direct home sales program in the second quarter, with an average sale price of $604,120. That is up from 292 homes sold in the same quarter last year, with an average sale price of $570,930.
Redfin’s growth in “iBuying” comes as the broader industry continues to fluctuate. Zillow Group, which shut down its iBuying business last year, on Thursday announced a new partnership with Opendoor, which settled a $62 million fine on Monday with the FTC for “misleading” customers with its home-buying program.
Redfin shares dropped more than 6% in after-hours trading Thursday, after it rose 3% to $9.08 in regular trading before the market closed. Its shares are down more than 76% in 2022.