Shares of the online housing brokerage Opendoor Technologies (OPEN -4.28%) plunged 23% this week, according to data compiled by S&P Global Market Intelligence, after the latest data showed that housing sales slowed to their lowest pace since 2009.
Housing inventory climbed quickly, but sales slowed as potential homebuyers shunned high prices, elevated interest rates, and economic uncertainty. With an unpredictable macroeconomic climate, investors are concerned that more pain could be ahead for the housing market and Opendoor.
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A cooling climate
The housing market showed its first dramatic signs of slowing down in March, with existing-home sales dropping 5.9% during the month compared to February. The monthly drop also represented a 2.4% decline year over year, according to data from Realtor.com.
Mortgage rates have fluctuated over the past month since President Trump announced aggressive tariffs on U.S. trading partners. But despite some temporary dips, they’re still elevated, sitting at around 6.8% for a 30-year mortgage.
While not historically high, mortgage rates are much higher than they were a few years ago, and they’ve remained stubborn during a historic rise in housing prices. For example, the median home sales price has spiked nearly 27% over the past five years to $416,900.
These rapidly accelerating home prices were fine when buyers felt more confident in the economy and their jobs, but that’s changed recently. A recent survey found that consumer confidence in where the economy is headed is at a 12-year low.
All of this is bad news for Opendoor, whose platform connects buyers and sellers. Opendoor also buys, flips, and sells homes, so the slowdown in homebuying is likely to hurt the business. Opendoor’s revenue fell 26% in 2024 to $5.2 billion, and its net loss widened to $392 million. Those figures were reported before the latest housing data, meaning Opendoor could face further downward pressure.
Not a great trajectory
With sales falling in 2024 and losses widening, Opendoor was already struggling. However, the latest housing market data indicates that tougher times could come.
Even if Trump’s tariffs don’t spur a recession, it’s evident that with consumers worried about their jobs and about price increases on goods due to tariffs, they’re holding off on house purchases. And with no end in sight to the tariff uncertainty, Opendoor may continue to be affected by this negative homebuyer sentiment.
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
