Home Sales Are Rising, But Who Stands to Benefit the Most?

Core Viewpoint - Recent home sales reports show a slight increase, providing some optimism for the real estate sector, but one month of positive data is insufficient to indicate a full recovery after several months of decline [1] Real Estate Sector Trends - A significant trend is emerging that could create long-term growth opportunities, particularly in the real estate services sector, focusing on leasing and transactional services [2] - Zillow Group, SoFi Technologies, and RE/MAX Holdings are identified as potential beneficiaries of this trend, with expectations of double-digit upside in the coming quarters as the U.S. housing market enters a growth cycle [3] Zillow Group Insights - Zillow acts as a middleman in real estate transactions and leasing, with its financial performance closely tied to the cyclicality of these markets [4] - The company is increasingly focusing on the rental segment due to high price-to-income ratios and rising mortgage rates, which have dampened demand for new homes [5] - Zillow's rental division is expected to capture a larger share of net revenue as the rental market expands, with 36% of Americans currently renting, a 50% increase from pre-COVID levels [7] Stock Performance and Projections - Analysts at Jefferies Financial Group have set a price target of $90 for Zillow stock, indicating a potential upside of 10% from current levels, following a 110% rally over the past year [9] - The stock has gained institutional support, with FMC LLC increasing its holdings by 179.5%, now owning 2.2% of the company, reflecting confidence in Zillow's long-term prospects [3] SoFi Technologies Outlook - SoFi Technologies could benefit from a rebound in the mortgage market, which is currently at a 1996 low, with potential for significant growth if market conditions improve [10] - The company's short interest has decreased by 10.2% recently, indicating a shift from bearish to bullish sentiment among investors [10] - State Street Corp. has increased its holdings in SoFi by 1.7%, reflecting optimism about future growth, with EPS forecasts predicting a doubling from $0.05 to $0.10 per share over the next 12 months [11][12] RE/MAX Holdings Potential - RE/MAX stock has rallied 45% over the past year and is positioned to benefit from trends in both the rental and buying markets [13] - The stock trades at a low price-to-book ratio of 0.6, offering a 40% discount to its book value, which could attract investors [15] - With 93.2% institutional ownership, RE/MAX is well-positioned to capitalize on the momentum generated by Zillow and the overall market [14]