With rising rates being the dominant theme in 2022, major housing names have faced the heat. Potential homebuyers are shying away from the market and it would probably take a combination of falling prices and a scale-back in rates to pique their interest.
Further, today, while new home sales came in 5.8% higher than the prior month, the numbers still indicated a 15.3% decline from year-ago levels.
Redfin (RDFN) noted that home buying by investors declined by 30% over the prior year during the third quarter and the company has already guided for a soft Q4. Consequently, RDFN shares have tanked 89% over the past year and short interest in the stock still remains high at about 19%.
RDFN did witness an uptick in demand in December but it still remains a far cry from peak levels.
A similar impact in the share price is playing out for Anywhere Real Estate (HOUS), RE/MAX Holdings (RMAX), and Compass (COMP). Shares of the three names have plummeted 63%, 39.6%, and 76% respectively over the past year.
Amid macro challenges, RE/MAX witnessed lower home sales in November and Compass anticipates a fall of more than 20% in its top line for the fourth quarter.
The Real estate Select Sector SPDR ETF (XLRE) too has shed 26.1% over the past year.
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