Real estate firms, Redfin and Compass are laying off workers as mortgage rates rise sharply and home sales drop.
In filings with the Securities and Exchange Commission, Compass announced a 10 percent cut to its workforce, and Redfin announced an 8 percent cut. Shares of both companies fell Tuesday.
Redfin’s stock touched a new 52-week low. Rising rates and overheated home prices, which are now up over 20 percent from a year ago according to various surveys, have crushed affordability.
Home sales have been dropping for several straight months, and the fall is expected to worsen.
Mortgage demand has fallen to its lowest level in over two decades.
Rates have taken off since the start of this year, rising from 3.29 percent in early January to 6.38 percent now, according to Mortgage News Daily.
Rates shot up more than half a percentage point in just the past three days, as concerns over inflation hit the bond market.
The Redfin filing had an attachment from CEO Glenn Kelman, who writes a regular blog on the company’s website.
In the blog posted Tuesday, Kelman wrote, “With May demand 17 percent below expectations, we don’t have enough work for our agents and support staff, and fewer sales leaves us with less money for headquarters projects.”