Shares of Zillow (ZG) jumped as much as 9% in extended trading Wednesday before giving back gains, after the real estate firm beat earnings estimates and reported fourth-quarter revenues of $435 million that beat estimates of $413 million.
Zillow made a variety of cost-cutting moves last year to help it weather the housing downturn, including slashing 25% of its workforce and ending its iBuying home-flipping business.
In a letter to shareholders, Zillow CEO Rich Barton said he’s optimistic about the outlook heading into 2023, citing lower mortgage rates from their June peak and a “looming backlog of homes under construction,” which will help affordability.
Housing Market Trends
Yesterday, the NAHB's Housing Market Index showed builder sentiment improved this month at the fastest pace in a decade, suggesting America’s home builders are growing more bullish on the housing market as buyer demand picks up, driven in part by slightly lower mortgage rates. The NAHB expects a rebound back to traditional construction levels later this year and in early 2024.
This morning, the U.S. Census Bureau reported that housing starts dropped 4.5% in January at a seasonally adjusted rate of 1.31 million units. Building permits, which signal future housing activity, edged 0.1% higher last month at a seasonally adjusted rate of 1.34 million units, up from 1.3 million in December.
Shares of Zillow are up over 50% since the start of 2023.