Zillow Group Inc. (NASDAQ:Z) CEO Jeremy Wacksman said affordability continues to pressure the U.S. housing market even as the company posted double-digit growth across key business segments in the first quarter.
Speaking to CNBC on Thursday following Zillow's earnings report, Wacksman said housing transaction growth remained modest and that macroeconomic uncertainty continues to keep buyers on the sidelines.
"We're seeing very modest gains in transaction volumes this year in the housing market," Wacksman said. "The challenge continues to be one of affordability."
Affordability concerns have increasingly become a recurring theme across the housing sector. Last month, D.R. Horton, Inc. (NYSE:DHI) also said that cautious consumer sentiment and affordability pressures continued to weigh on demand.
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Housing Market Headwinds
The comments follow Zillow's latest earnings report, where the company beat Wall Street estimates on both revenue and earnings. Zillow reported quarterly revenue of $708 million and earnings of 53 cents per share.
The company also reported purchase loan origination volume of $1.5 billion during the quarter.
Despite the beat, Zillow shares moved lower in extended trading after the company issued softer-than-expected second-quarter profit guidance.
Wacksman said Zillow still expects mid-teens revenue growth for the full year alongside EBITDA margin expansion and faster net income growth.
Zillow's AI Push
Wacksman also outlined Zillow's growing focus on artificial intelligence, describing AI as a long-term tailwind for the real estate sector.
He said Zillow is using AI across home search, virtual touring, mortgages and agent communication as more parts of the housing transaction move online.
According to Wacksman, roughly 80% of Zillow's traffic comes directly to the platform rather than through search engines.
The company is also expanding proprietary listing content, including 3D home tours, interactive floor plans and drone-based property tours.
Zillow data released in April showed homes that sold in March went under contract in 19 days on average, while the typical listing stayed on the market for 56 days, underscoring increasingly selective buyer behaviour.
Price Action: Zillow shares closed Wednesday's regular trading session up 2.27% at $44.53 before falling 5.71% in after-hours trading to $41.99 following the company's quarterly results. Shares were down over 5% in pre-market trading on Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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