Topline
The real estate brokerages Compass and Redfin announced large layoffs Tuesday as housing demand plummets, causing their shares to tumble.
Pictured is a house listed for sale with a Compass sign in California.
Key Facts
Compass will fire about 450 employees, 10% of its workforce, while Redfin plans to lay off about 470 employees, or 8% of its workers, according to respective filings with the Securities and Exchange Commission.
Redfin CEO Glenn Kelman wrote in a blog post, “we don’t have enough work for our agents and support staff,” noting “May demand [was]
17% below expectations.”
Compass didn’t give an explicit reason for the layoffs in its filing, but a company spokesperson told CNBC it’s due to “clear signals of slowing economic growth.”
Shares of Redfin fell 4.6% to $8.15 in midafternoon trading, an all-time low for the stock and a 91.6% drop from the stock’s record closing high of $96.59 reached last February.
Compass shares dipped 8.8% to $4.34 and are down 54.6% year-to-date and 78.5% from their peak.
Key Background
The layoffs are the latest signal of an increasingly brutal housing market. Adjusted new single family-home sales have fallen for four straight months, dipping 16.6% in April, according to data released by the government last month, with the average 30-year mortgage rate at 5.2%, up from last August’s low of 2.8%. Mortgage demand has fallen to the lowest levels in 22 years according to survey data released last week by the Mortgage Bankers Association, and applications dropped 6.5% compared to the prior week.
Further Reading
Housing Market Boom ‘Is Over’ As New Home Sales Implode–Here’s What To Expect From Prices This Year (Forbes)
Pending Home Sales Plunge To Lowest Level In Nearly A Decade—Worst Could Be Yet To Come (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2022/06/14/compass-redfin-shed-workers-amid-bleak-housing-market/