Zillow profit view misses on cool housing market, legal costs

Zillow Group Inc. forecast first-quarter profit that falls short of analyst estimates as the home-search site balances legal costs from ongoing litigation and expenses from the company's partnership with Redfin.

The Seattle-based company said Tuesday it sees adjusted earnings before interest, taxes, depreciation and amortization range with a midpoint of $167.5 million for the three months ending March 31, missing Wall Street's estimates of $182.7 million.

The shares fell as much as 8.6% in post-market trading. The stock had fallen 20% this year through Tuesday's close.

READ MORE: Zillow sued for steering buyers to its mortgage unit

While the US housing market might find some relief in 2026 after mortgage rates fell to their lowest level since 2022, homebuilders are still not confident about the market's rebound. Fewer home sales and new home builds as well as high prices spell future challenges for Zillow, which makes more money the more activity there is in the housing market. The company is facing other headwinds too, including multiple lawsuits that question Zillow's market dominance and Google's decision to test a new real estate advertising format that could rival Zillow's services.

Chief Executive Officer Jeremy Wacksman said the way to think about the current state of the US housing market is in terms of marginal improvements, such as pricing balancing out and slightly lower mortgage rates. 

"The slope is in the right direction," he said in an interview. "The challenge is we still have a long way to go. So we're planning for a little bit of improvement."

Compass Inc. lost a bid last week to temporarily block Zillow's ban on listings that have been advertised elsewhere first. The Federal Trade Commission also sued Zillow in September to block a $100 million deal that made the company the exclusive provider of information on apartment rentals offered by Rocket Cos.' Redfin.

The company reported fourth-quarter adjusted EBITBA of $149 million, which fell short of analyst estimates.