Rocket Companies (NYSE:RKT) experienced a significant stock decline Thursday after Redfin, a real estate brokerage powered by Rocket, published a report that showed weak growth in the housing market.
The report indicated a 1% rise in new U.S. home listings for the first time in over two months. Despite this increase, the housing market remains challenging, with homes taking longer to sell and a buyer’s market prevailing.
Home Market Improvements Coming Slowly
Several factors are influencing the current housing market dynamics:
- Homebuying demand is showing signs of improvement, with pending home sales falling only 1.6% year-over-year, marking the smallest decline in nearly two months.
- Mortgage-purchase applications are near their highest level in three years, despite a slight 0.4% decline from the previous week.
- The median monthly housing payment has decreased by 6.6% from a year ago.
- The weekly average mortgage rate stands at 6.09%, slightly up from last week but still close to a three-year low.
These conditions are encouraging some sellers to enter the market, yet homes are taking longer to sell, with the median days on the market reaching 63, the longest in six years.
Mortgage Bond Proposal Buoys Stock
Despite the seemingly positive indicators, Rocket Companies faces challenges. The increase in new listings and the buyer’s market pressure sellers to be more competitive, which could impact Rocket’s mortgage origination business. Additionally, the launch of 2X daily ETFs targeting Rocket by Defiance ETFs recently added volatility to its stock, offering high-risk, short-term trading exposure.
Earlier this month, Rocket’s stock surged following President Donald Trump’s proposal to buy $200 billion in mortgage bonds, which initially boosted investor confidence. However, the current market conditions and competitive pressures have overshadowed these gains.
Shares Trade Below Key Levels
RKT Price Action: Shares were down 16.51% at $17.33 on Thursday, according to Benzinga Pro data.
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