With the housing market in a whole new turmoil, this time on the demand side as interest rates continue their steady upward climb, it’s no surprise to hear homebuying is on the decline. That’s hitting Redfin (NASDAQ:RDFN) particularly hard, down 3.74% in Tuesday’s trading.
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The word out of Redfin is that home turnover rates in the United States are now down to a level not seen in the last 10 years. Redfin’s numbers point to around 14 out of every 1,000 homes in the U.S. being bought in that time. The high point, meanwhile, was back in the first half of 2019, when 19 out of every 1,000 changed hands. That’s just an average, of course, so numbers will vary by location. The Redfin report notes that 24 out of every 1,000 homes are being bought in Newark, New Jersey, while San Jose, California, is seeing merely six out of every 1,000 homes passing on.
Redfin’s deputy chief economist, Taylor Marr, pointed squarely at interest rates as being the big reason behind the hit. Marr hopes to see interest rates pare back to around 5%. But with the average mortgage rate up around 7.38%, it’s got a long way to drop before Marr sees the desired 5%. Several experts in a CBS report, meanwhile, don’t look for rates to drop before 2024, if even then.
Redfin’s fate, therefore, isn’t in good shape. Redfin stock is considered a Moderate Sell by analysts, with six Hold ratings and four Sell. Further, with an average price target of $8.09, Redfin stock comes with 49.22% downside risk.
