Shares of real estate broker Redfin (NASDAQ:RDFN) fell about 12% on Thursday. Interestingly, the broader real estate sector witnessed downward pressure, with Opendoor Technologies (OPEN), KB Home (KBH), and Compass (COMP) each down by 14%, 3.1%, and 9.6%, respectively. The decline was triggered by comments from the National Association of Realtors (NAR) and the Federal Reserve, which indicated a less favorable outlook for the industry.
As per a report from the NAR released on Thursday, existing home sales in August declined 15.3% year-over-year and 0.7% sequentially. Furthermore, home inventories continued to shrink, with a year-over-year decrease of 14.1% in August and a 0.9% sequential decline.
NAR Chief Economist Lawrence Yun pointed out that home prices are rising despite lower sales. He emphasized that a potential slowdown in home price growth could occur if the housing supply is essentially doubled.
Additionally, the Fed decided to leave interest rates unchanged this month. The central bank signaled its intention to implement at least one more quarter-point rate hike before the conclusion of 2023, a move that likely influenced investor sentiment.
Finally, the comments of the NAR and the Federal Reserve suggest that the challenges facing Redfin’s core real estate business are unlikely to ease in the near future.
Is RDFN a Good Stock to Buy?
None of the Wall Street analysts covering RDFN stock have a bullish stance. In fact, based on nine Hold and three Sell ratings, Redfin has a Hold consensus rating. The average stock price target of $9.53 implies a 33.5% upside potential from the current level. Shares of the company have gained about 66% so far in 2023.
Interestingly, the most accurate and profitable analyst for BR stock is D.A. Davidson analyst Tom White. Copying the analyst’s trades on this stock and holding each position for one year would have resulted in 70% of your transactions generating a profit, with an impressive average return of 82.14% per trade.
