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“We could be looking at years instead of months with fewer home sales,” Redfin’s CEO says, announcing 8% layoffs

As the US housing sector cools, housing companies are shedding jobs left, right and center. A CEO of a real estate company said job cuts were necessary because it was getting so bad.

“A layoff is always a terrible shock, especially when I’ve said we’d do anything to avoid one… But mortgage rates rose faster than at any time in history,” Redfin RDFN,
+7.60%
CEO Glenn Kelman said in a blog entry He disclosed that he had asked 8% of the company’s employees to leave the company. “We could face years, not months, of fewer home sales, and Redfin still plans to succeed.”

Mortgage rates have risen on rising inflation, with the average 30-year fixed rate bond rising 14 basis points to 5.23% in the week ended June 9, according to weekly data from Freddie Mac. New data is expected Thursday morning.

On Wednesday, the US Federal Reserve raised interest rates by 0.75 percentage points, the largest hike since 1994, as it tries to tame rising inflation from a 40-year high.

Redfin and another real estate company, Compass COMP,
+5.56%,
have both announced job cuts, MarketWatch’s Tomi Kilgore reported on Tuesday. Redfin said it would lay off 470 employees. Compass said it was cutting 10% of its workforce, around 450 jobs.

rocket mortgage RKT,
-2.45%
began offering voluntary takeovers for about 8% of its employees earlier this year.

In November last year, Zillow Z,
+1.70%
dismiss a quarter of its workforce when it ceased its house-flipping operation.

Meanwhile, housing data reported Wednesday morning signaled further weakness in the sector, an economist said.

“This is still the early phase of moving house; Home builders are not yet ready to admit the sky is falling,” explained Ian Shepherdson of Pantheon Macroeconomics. “But it is.”

Getty Images/iStockphoto

“Early Stages of Handover”

One economist said that given the rapidly changing environment, more problems are to be expected in the housing sector

The do-it-yourself confidence index fell two points in June for the sixth consecutive month.

“We expected a bigger hit, but this isn’t the bottom,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note on Wednesday. “Mortgage demand is in free fall and this [National Association of Home Builders] The index will fall much further over the summer.”

With mortgage applications also falling from December’s highs, Shepherdson said inventories and new home sales data are all pointing to signs of a further decline in prices and new housing activity.

“This is still the early phase of moving house; Home builders are not ready to admit the sky is falling,” he said. “But it is.”

Write to: aarthi@marketwatch.com

https://www.marketwatch.com/story/we-could-be-facing-years-not-months-of-fewer-home-sales-says-redfin-ceo-announcing-8-layoffs-11655308343?rss=1&siteid=rss “We could be looking at years instead of months with fewer home sales,” Redfin’s CEO says, announcing 8% layoffs

Brian Lowry

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