Zillow Shares Dip Near Lows as Mortgage Rates Hit 6.95%

Zillow Group shares have retreated to the vicinity of their 52-week lows, with both Class A and Class C common stock trading around $30. This price point sits just above the recent low of $29, reflecting persistent pressure on the online real estate platform. The company faces a challenging operational environment as the Federal Reserve raised its benchmark interest rate by 25 basis points this week, pushing the target range to 3.75% through 4.00%.

Borrowing costs have continued to climb in tandem with monetary tightening. The average 30-year fixed mortgage rate has increased to 6.95%, up from 6.76% the previous week and significantly higher than the 6.26% recorded a year ago. These elevated rates create direct headwinds for Zillow’s core home-buying and mortgage ecosystems by limiting consumer affordability and reducing transaction volumes.

Second Quarter Revenue Shows Mixed Growth

Despite the difficult housing backdrop, Zillow reported second-quarter revenue of $772 million, an 18% increase year over year. The residential segment contributed a 7% rise in revenue, while the rentals business expanded more rapidly, jumping 31%. The mortgage division saw the strongest growth, with revenue surging 75% as purchase-loan originations nearly doubled during the period.

Management has provided forward-looking guidance that projects continued expansion. The company expects full-year 2026 revenue to reach between $2.92 billion and $2.96 billion, representing 13% growth. Adjusted EBITDA is forecast to land in the range of $730 million to $760 million, a 17% increase. These targets suggest the business is growing faster than the broader residential real estate market despite current headwinds.

Earnings Estimates Face Downward Revision

Analyst consensus currently points to earnings per share of $2.22 for the current year, a 35% increase. Estimates for the following year indicate a further 21% rise to $2.69 per share. However, recent data from Zacks Investment Research shows that full-year 2026 and 2027 earnings estimates have been slightly lowered over the past 60 days. This adjustment reflects the increasingly difficult environment for housing transactions and mortgage activity.

Valuation Metrics Offer Discount To Peers

The recent share price decline has improved Zillow’s valuation metrics. Both Class A and Class C shares now trade at approximately 13 times forward earnings. The price-to-sales ratio is also near 2 times forward sales, a level often considered attractive by investors. These multiples provide a notable discount to the broader S&P 500 benchmark, though the sustainability of this valuation depends on the company’s ability to navigate prolonged high interest rates.

Investors can access Zillow’s financial performance through either ticker, as both represent the same underlying business. Class A shares carry voting rights, while Class C shares generally do not. Although the economic exposure is similar, the shares may trade at slightly different prices due to differences in voting power, liquidity, and supply. According to GN auto stocks real estate stock analysis, the fundamental drivers remain focused on the company’s ability to maintain growth in a high-rate environment.