Zillow Home Loans experienced an 80% year-over-year rise in purchase volume in the third quarter, contributing to a 63% annual increase in mortgage revenues that powered Zillow Group’s 17% year-over-year revenue growth in the third quarter, per an earnings announcement.
The company’s revenue totaled $581 million in the third quarter, with residential revenues of $405 million, (+12% YOY) and rental revenues of $123 million, (+24% YOY). Tripling rentership rates highlight pooling purchase demand that many mortgage lenders have found difficult to access on account of persistently low affordability.
Still, the results of Zillow's 2024 Consumer Housing Trends Report reveal that 45% of buyers who purchased homes in the past year snagged a rate below 5%, despite average mortgage rates hovering near 7% for much of the year.
More than one-third of Zillow’s respondents cited seller or builder special financing as a source of the markdown, and roughly one-quarter made their offer contingent on a rate buydown (26%), refinanced after buying (25%), or borrowed from a friend or family member (23%).
On a GAAP-adjusted basis, Zillow’s third-quarter net loss of $20 million, or 3% of total revenue, roughly matched the second quarter’s GAAP-adjusted loss of $17 million, or 3% of total second-quarter revenue. The second quarter of 2024 was also marked by growth in Zillow’s residential revenues, which rose 8% YOY to $409 million.
Zillow attributed the third-quarter’s sustained growth in residential revenues to “continued conversion improvements as more buyers and sellers transacted with Zillow agent partners.” The press release noted that third-quarter results “outperformed the residential real estate industry total transaction value growth of 2%, as well as total industry purchase loan origination volume, which the company estimates declined in the low single digits in Q3.”
Where mortgage revenues of $34 million marked 42% YOY growth due primarily to a 125% YOY increase in purchase loan origination volume in Q2 -- mortgage revenues increased 63% annually to $39 million due to an 80% YOY increase in purchase loan origination volume to $812 million in the third quarter.
Traffic to Zillow Group’s mobile apps and sites was slightly YOY in Q3, rising 1% to 233 million average unique monthly users. Visits during the third quarter were 2.4 billion, up 3% YOY.
“We continue to invest in tech solutions to build the integrated transaction experience consumers demand and deserve,” commented Zillow CEO Jeremy Wacksman in the earnings announcement. “These investments give Zillow an advantage as we connect high-intent movers with high-performing agents, driving adoption of our services and contributing to increased revenue.”
Zillow Group shares jumped more than 20% in early-market trading at news of the earnings.
