Zillow Group was breaking more than 6% in premarket trading Monday after it announced it would halt home purchases for the rest of the year.
Zillow ticker: Z told Bloomberg in an email that it was beyond operational capacity in our Zillow Buys business and are not taking additional contract for buy homes at this time. The company sold 3,805 homes in the second quarter — the most the company has ever bought in a single quarter with a wide margin — while buying 2,086 homes.
We continue to process the purchase of homes from sellers who are already under contract, as quickly as possible, adding the company.
Zillow Offers launched in 2018 to allow customers to request instant offers and sell directly to Zillow, which then buys the property, makes necessary light repairs and then re-lists the home for sale.
The company iBuyer business has slowed because it is difficult to find the labor technicians to make those repairs during the current labor shortage.
Zillow said pausing new acquisitions will allow it to work through its backlog.
Zillow Homes, the iBuyer segment, reported fiscal second quarter revenue of $777 million, up 71% from a year earlier, while mortgage revenue rose 68%.
In an interview with Barron s in August following second-quarter earnings, Rich Barton said the company's iBuyer business was really accelerating, despite the fact that sellers have many options for selling properties in what remains a hot market with limited supply.
Zillow said it expected fiscal third-quarter revenue of $1.93 billion to $2.05 billion, which was well ahead of the Wall Street consensus of $1.45 billion at that time. Analysts have raised sales estimates for the period, with the FactSet consensus now hovering at approximately $2 billion. In August, the company projected revenue from Zillow Homes of $1.4 billion to $1.5 billion.
Barron s has sent Zillow an email asking whether the report that it has halted home purchases for the rest of this year will prompt a change to its outlook for the third quarter.
In premarket trading, Zillow s class C shares fell 6.7% to $88.60. The stock has plunged close to 27% in 2021.