Zillow Cuts Outlook as Earnings Miss Estimates
Zillow reported weaker third-quarter results than analysts expected and lowered its full-year revenue forecast as mortgage rates climbed.
Updated on Nov. 5, 2026 in Residential
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Zillow Group reported third-quarter adjusted earnings of 55 cents per share, below the 67 cents Wall Street expected, and revenue of $724 million, up 7% year over year but short of the $773.04 million consensus. The company also lowered its 2026 revenue forecast to $2.84 billion to $2.87 billion, and its shares fell 9.38% to $30.72 on Thursday.
Why it matters
Mortgage rates rose 100 basis points during the third quarter, reaching the mid-7% range at their peak, and Needham said macroeconomic headwinds were worse than expected. For U.S. homebuyers, sellers and renters, softer housing activity and lower transaction volume shape the availability and cost of residential real estate services.
Residential revenue declined 4% in the third quarter, while mortgage revenue rose 32% and rentals revenue rose 26%. Zillow's Q3 revenue was $724 million against a $773.04 million consensus, and whether the residential decline reverses depends on how the housing market performs in coming quarters.
The players
Zillow Group
Zillow Group is a major U.S. online real estate marketplace operating across home listings, mortgages and rentals.
Bernie McTernan
Bernie McTernan is a Needham & Company analyst who covers the real estate technology sector and reiterated a Hold rating on Zillow.
Needham & Company
Needham & Company is an investment bank and brokerage firm whose research division publishes equity analysis on publicly traded companies.
The details
Zillow is transitioning from its Market-Based Pricing model to its Preferred model and expects 75% of customer connections to move through Preferred by year-end. Needham analyst Bernie McTernan reiterated a Hold rating and cut earnings estimates, including a revised 2026 adjusted EBITDA estimate of $494.1 million and a 2027 forecast of $751 million.
Timeline
Third quarter 2026: Mortgage rates rose 100 basis points and Zillow reported weaker results.
Thursday, November 5, 2026: Zillow shares fell 9.38% following the earnings report.
Fourth quarter 2026: Zillow expects revenue of $635 million to $665 million, and Needham projects a 12.5% housing market decline.
End of Q1 or early Q2 2027: Zillow aims to complete its pricing model transition.
Housing Market Pressure
The 100-basis-point mortgage rate increase during the third quarter of 2026 is the specific trend Needham cited as the source of macroeconomic headwinds, and Zillow's guidance cut shows that pressure reaching platform revenue. Needham's projected 12.5% housing decline for the fourth quarter would extend that pattern if it materializes.
Softer housing activity and higher mortgage costs can affect the price and availability of home listings, mortgage services and rentals for U.S. consumers. Shoppers comparing real estate platforms may notice changes as Zillow shifts more customer connections to its Preferred model.
The takeaway
Monitor mortgage rate trends and housing transaction activity before making major home purchase or sale decisions, since platform revenue tends to track the broader market. Compare current listing and financing options across multiple providers rather than relying on a single platform.
What happens next
Zillow aims to complete its transition to the Preferred pricing model by the end of the first quarter or early in the second quarter of 2027.
Further reading
Explore more residential real estate coverage for context on how housing market conditions affect homebuyers and renters across the United States.
Source note: This article includes information reported by Benzinga.
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Given current mortgage rates, are you planning to buy a home in the next year?
