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High interest rates and sluggish sales can be a drag on the real estate industry, but Zillow managed to buck the trend, revealing Wednesday that revenue soared in the third quarter — with notable gains from the portal giant’s mortgage business.

In total, Zillow brought in $581 million in revenue between July and September of this year, according to a recently released earnings report. That represents an increase of 17 percent year-on-year – with the company pointing out in the report that this figure exceeds the overall transaction value growth of just 2 percent in the wider sector.

All of Zillow’s segments – residential, rental and mortgage – experienced year-over-year revenue growth. But the mortgage segment was the real highlight, with sales in that part of the business rising 63 percent year over year to $39 million. In the report, the company attributes that improvement to “an 80 percent year-over-year increase in purchase loan volume to $812 million in the third quarter.”

Sales in the company’s residential segment increased 12 percent year over year, reaching $405 million. The residential segment includes Zillow’s Premier Agent program, which sells leads to real estate agents. In a shareholder letter, the company said the program “benefited from continued conversion improvements as more buyers and sellers transacted with Zillow agent partners.”

Meanwhile, rental revenue reached $123 million, a 24 percent improvement from the third quarter of 2023. The company attributed the gain to growing multifamily sales.

The portal also lost $20 million in the quarter. However, that loss was lower than the $28 million it experienced in the same period in 2023.

Jeremy Wacksman

In the report, Zillow CEO Jeremy Wacksman said his company had “another strong quarter,” with investments in technology and more giving the portal an advantage.

“I am proud of how we are executing our strategy to serve tenants, buyers, sellers, agents and the broader residential real estate industry,” Wacksman continued. “We continue to invest in technical solutions to build the integrated transaction experience that consumers demand and deserve.”

In an interview with Inman Wednesday afternoon, Wacksman added that “most of our mortgage growth comes from meeting consumers who have financing questions.” And he added that the growth in the segment is proof that Zillow’s “enhanced go-to-market strategy,” which guides buyers through the entire purchasing process, is “really working.”

“We see a long-term mortgage growth plan ahead due to this improved market strategy,” Wacksman added.

The comments reference a specific concept, which Zillow calls “enhanced markets,” which should provide consumers in some areas with a more seamless and thorough homebuying experience. That experience includes simplified tour options and connecting consumers with financing. Zillow started the year with nine enhanced markets, but Wacksman told Inman the company has now expanded the concept to 43 markets.

Wednesday’s report also showed that traffic to Zillow’s sites remained largely flat in the third quarter, with 233 million average unique users per month — a 1 percent year-over-year improvement. Total visits to Zillow’s sites and apps reached 2.4 billion this quarter, a 3 percent improvement compared to last year’s third quarter.

Heading into Zillow’s earnings report Wednesday, the company’s shares were trading at just under $60. That was down a day, but higher compared to both six months and a year ago.

Shares rose in after-hours trading after the release of Wednesday’s report.

Credit: Google

Zillow had a market cap of about $13.4 billion as of Wednesday afternoon.

The portal last reported revenue in August. At the time, the company announced that it generated $572 million in revenue between April and June of this year. That number was 13 percent higher than a year ago. The company’s mortgage segment was also a highlight last quarter, with sales growing 125 percent year over year.

Zillow’s latest earnings report comes at a time of intense pressure for the real estate industry. In addition to high rates and slow sales, a series of lawsuits against antitrust commissions has changed the way agents — who pay Zillow for leads — collect compensation.

Wacksman appeared to reference that situation, saying on a call with analysts Wednesday afternoon that Zillow and the agents working with the company should take advantage of the industry’s recent “very healthy evolution toward greater transparency.”

Jeremy Hoffman

Zillow Chief Financial Offer Jeremy Hoffman also briefly discussed commission lawsuits and the resulting National Association of Realtors settlement during the call. He said the agents who work with Zillow are top earners, so he “can’t comment on broad commission trends.” However, within that group of top earners, “we have seen commission rates remain within a tight range.”

Hoffman also echoed Wacksman’s point that Zillow should benefit from changes resulting from commission disputes.

In recent months, the real estate sector has also become embroiled in a debate over the Clear Cooperation Policy. The policy is a National Association of Realtors rule that requires agents to list their listings in their NAR-affiliated MLS within the day they begin marketing those listings. Zillow is among the real estate entities in favor of enforcing the rule.

Asked about clear collaboration during a call with Inman, Wacksman said, “For us, it’s about private networks and making sure that listings don’t evolve into private networks.”

“We think private networks are bad for consumers, bad for agents and very bad for the industry as a whole,” he said. “They create fragmentation and inequality.”

During the analyst call, Wacksman added that defending Clear Cooperation is less about Zillow’s business strategy because, as the largest portal, the company will always “find ways to get our share of the inventory.” But he reiterated his point that he believes ending Clear Cooperation is bad for consumers, adding that “putting listings behind a velvet rope” is the wrong move.

The comments represent something of a polar opposite to the view that Compass CEO Robert Reffkin laid out in his own company’s earnings call last week. While speaking to investors, Reffkin described Compass’ support for private networks and suggested that in the future, consumers will visit many sites – rather than one portal – to find listings.

Zillow, on the other hand, is pushing for a different future.

“We have been quite public about the fact that we advocate for preserving and strengthening access to listings and ensuring that listings are shared freely with buyers and sellers because that is such a strong part of our marketplace,” Wacksman told us to Inman. “Clear cooperation is of course the current way in which this is done. It makes it possible to share listings with participants today, and we would like to see this strengthened.”

Update: This report has been updated after publication with additional details from Zillow’s earnings report, executive commentary and other context.

Email Jim Dalrymple II