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Real Estate firm Zillow returned a profit for the first quarter versus a loss a year ago. $Z is benefiting from the housing boom where US March housing starts soared in March 19.4%, the highest reading since June of 2006. The median existing home price was the highest on record.

 Home Sale

Zillow Group Inc NASDAQ: Z Reported Earnings After Close Tuesday

$0.47 Beat $0.26 EPS Forecast AND $1.2 Billion Beat $1.1 Billion forecast in revenue 

Earnings

Zillow earned $52 million, or 21 cents a share, in the first quarter, versus a loss of $163 million a year ago. Adjusted for one-time items, Zillow said it earned 47 cents a share in the quarter. Revenue rose 8% to $1.2 billion, the company said. Analysts polled by FactSet had expected Zillow to report adjusted earnings of 26 cents a share on sales of $1.1 billion.

Zillow called for second-quarter sales between $1.236 billion and $1.284 billion, as growth trends will continue, the company said. Zillow called for consolidated adjusted EBITDA between $116 million and $140 million in the quarter. Traffic to Zillow's apps and websites rose 15% to 221 million average monthly unique users, driving 2.5 billion visits during the quarter, up 19% year-on-year, the company said. 

 

Market Reaction Zillow Group Inc NASDAQ: Z

Market Close 127.40▲ 5.95 (+4.90%) After Hours · May 4, 2021

Highlights

Business unit results:

Premier Agent: The company’s IMT segment, which includes its Premier Agent business that connects realtors to consumers, grew revenue by 35% to $446 million. Rentals revenue was up 46%.

Mortgages: Revenue spiked 169% to $68 million. Mortgage origination volume was up 8X. 

Zillow Offers: The company’s home-buying segment brought in $704 million in revenue, down 9%, with a loss of $58.5 million, down from $98 million. Zillow bought 1,856 homes and sold 1,965 homes as it continues to accelerate activity following a pandemic pause. It ended Q1 with 1,422 homes in inventory. Zillow recently began using its Zestimate tool to make cash offers on homes.

Traffic: The company’s apps and websites drew 221 million average monthly unique users, up 15%, and 2.5 billion visits, up 19%.

More from CEO Barton: Zillow is reorganizing its structure to focus more on a customer’s holistic needs — they may need an agent, then a mortgage, then a Zillow Offers bid to sell their home, for example. “Across the country, Millennials are moving up, Baby Boomers are downsizing, and in between, people of all generations are rethinking their lives in a cultural phenomenon we have termed the Great Reshuffling,” '

Barton said in a statement. “Millions come to Zillow to surf and dream, and when they are ready to transact, they can get a mortgage from Zillow Home Loans, connect to a Zillow Premier Agent, and may even find an initial offer from Zillow Offers to buy their home for their Zestimate.”

Outlook

“Looking forward, we believe the tailwinds we have been talking about — from the Great Reshuffling and the offline-to-online technology migration, to positive demographic trends and pent-up demand for housing post-pandemic — are supportive of housing in 2021 and over the long term,” Zillow CEO Rich Barton wrote in a shareholders letter.

US March Existing Home Sales Lower as Median Price Hits Record High 

March US existing home sales from the National Association of Realtors rose 6.01m vs 6.11m expected. Sales -3.7% m/m vs -1.8% expected (-6.6% prior) from an upwardly revised 6.24 million (from 6.22 million) in February. Notably pressure is coming from the supply of existing homes for sale remains near all-time low levels. This is creating affordability pressures for prospective buyers.

Median House Prices Record High

 united states median sales price of existing single family homes fed data

  • The pace of price increases well beyond the pace of income gains, which is going to create affordability pressures for prospective buyers along with rising mortgage rates.
  • The median existing home price for all housing types represents the 109th consecutive month of year-over-year gains and the highest on record.
  • The median price for single-family homes increased 18.4% yr/yr to $334,500, which was also a record high.
  • Existing home sales across regions:
  • Northeast (-1.3%); Midwest (-2.3%); South (-2.9%); and West (-8.0%).
  • Median home prices by region year-over-year:
  • Northeast (+21.4% to $364,800); Midwest (+13.5% yr/yr to $248,200); South (+15.6% to $283,900); and West (+16.8% to $493,300).
  • First-time buyers accounted for 32% of sales in March, up from 31% in February and down from 34% in March 2020.

US Housing Starts Soared 19.4% in March To Highest Since June 2006 

US March housing starts soared in March 19.4% m/m vs +13.5% expected, or 1739K v 1613K expected and February's revised 1457K. The highest reading since June of 2006, after harsh winter weather affected activity in February. Building permits were 1766K v 1750K expected

US New Housing Starts March 2021 

The move suggests disruption and demographic influences.

Source: Zillow

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