© Reuters file photo: January 2, 201 Vir A sign of a house for sale is seen inside the Washington DC Beltway in Annandale, Virginia.
(Reuters) – Shares of Zillow Group (Nasdaq 🙂 Inc. hit a one-year low on Monday after the online real estate firm said it would stop buying homes this year as labor shortages and supply disruptions hampered timely sales of reformed properties.
The company, through its Zillo offer unit, purchases homes from homeowners and makes light repairs on them, which requires the services of inspectors and contractors. It lists homes for sale on its platform.
Zillow shares fell 11.4% to .5 93.54 in first trading, the lowest level since September 2020.
The U.S. housing sector, which previously saw a growth rate, has lost momentum in recent months, hit by a tough job market, supply chain problems and a shortage of raw materials.
As a result, property rates have risen, with Central American home prices rising about 15% in August from a year earlier.
“We believe that the impact of Zillow’s decision may be due to the slowdown in home sales and the company’s inability to sell at the same rate it is achieving, as buyers have taken a step back,” Bofa Securities said in a note.
Jillo, which operates the popular home valuation model ‘Gestimates’, said it would clear a backlog of assets on its platform. The company bought 3,805 homes in the second quarter.
However, analysts say Zillow’s move may open the door for competitors such as Opendur (Nasdaq 🙂 Technologies Inc. to gain market share.
Wadebush analyst Eagle Aronian said in a note that Opendor could gain a significant portion if it typically works more efficiently.
The company, which emerged last year by merging with a blank-check firm led by venture investor Chamath Polyhapitiya, bought 49 homes in the second quarter.
Shares of OpenDore rose 2.6% in afternoon trade, and Zillow shares were down 8.5%.
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