Getting Ahead of a Housing Market Re-Heat

At some point, the weak housing market has to recover, right? 

Right?

The average 30-yr Mortgage rate has hovered above 6% for nearly 3 years now.

And it looks like the homebuyers who locked in low rates during Covid aren’t budging. 

U.S. existing home sales rose 4.2% in February 2025 to an annualized rate of 4.26 million, but the overall trend remains flat. 

However, the current administration is doing everything in its power to bring rates down. 

We’re starting to see some dominoes fall in line.

This morning’s CPI print came in ice cold, with headline inflation falling 0.1% month-over-month and core inflation rising just 0.2%—both softer than expected. Traders are now pricing in two to three rate cuts before year-end, with the first potentially coming as soon as June. The 10-year yield dropped sharply on the news.

Mortgage rates haven’t reacted yet. The 30-year fixed remains stuck around 6.6%, according to Freddie Mac. But if the Fed cuts and yields keep sliding, housing demand could break out of its holding pattern fast.

There’s a coiled spring of buyers waiting. Inventory remains low, but it’s up 5.1% month-over-month, and the median home price just posted a 3.8% year-over-year gain—proof that demand is still alive, just waiting for relief on financing.

We're watching this setup closely.

Some stocks are especially well-positioned for a rate-driven housing rebound—whether through new home construction, real estate transaction volume, or furnishing newly purchased homes.

Here is one we’re watching very closely—and one we aren’t willing to bet on.

Rocket Mortgage (RKT) is leveraging AI, rapidly expanding

Rocket Companies operates a collection of consumer finance businesses, including Rocket Mortgage, Rocket Homes, and Rocket Money. Its core business is providing residential mortgages, servicing loans, and offering tools for home search and personal financial management.

Rocket is using AI to speed things up and lower costs across the board.

Internally, a tool called Navigator lets employees create simple digital tools to automate repetitive tasks. For example, someone on the operations team can build a dashboard that pulls client info from different systems or automatically sends reminders. These quick fixes help employees solve problems without waiting on engineering.

Rocket’s main system, Rocket Logic, handles paperwork, verifies financial info, and manages follow-ups with clients. The company says it doubled automation rates for key steps like appraisals and asset checks in 2024. These improvements saved more than one million hours of manual work and led to $40 million in cost reductions.

On the consumer side, the new Rocket.com includes an AI assistant trained on housing data and mortgage rules. It can answer questions, connect people with loan officers, and process pre-approvals directly from home listings.

The end result: fewer bottlenecks, faster service, and more efficient mortgage approvals.

Right now, Rocket is beefing itself up ahead of a more favorable home buying environment.

A month ago RKT announced it is buying Redfin (RDFN) in a $1.75 billion all-stock deal. The move links Redfin’s 50 million monthly visitors and nationwide agent network to Rocket’s mortgage platform, aiming to simplify the homebuying process. Rocket says the deal will boost growth in purchase loans and save more than $200 million annually by 2027.

Rocket Companies also announced a $9.4 billion all-stock acquisition of mortgage lender Mr. Cooper. The deal adds nearly 7 million clients and will give Rocket control of roughly one in every six mortgages in the U.S., significantly expanding its servicing business while cutting customer acquisition costs.

One thing is clear – when the market does spring back to life, there’s a decent chance RKT will be involved in part of the process.

While Mortgage interest remains comparatively low, Rocket’s app usage for money management is growing at a nice clip.

App usage across the board is up +13% YoY. 

This creates a nice stream of crossover when those users buy a house.

This is one of our top names to watch right now. Could be a major player of the next housing boom.

On the flipside, a covid darling is struggling

Opendoor (OPEN) Consumer Interest Fading

​During the pandemic, Opendoor experienced significant growth as the housing market boomed and demand for digital home-buying solutions increased. The company's revenue surged from $2.58 billion in 2020 to $15.56 billion in 2022. 

However, as mortgage rates began to rise and the housing market cooled, Opendoor's financial performance declined. 

In 2023, the company reported a 55% decrease in revenue, down to $6.9 billion, and a net loss of $275 million. 

Additionally, founder Eric Wu announced his departure from the company at the end of 2023. 

Currently, Opendoor's stock is trading at $0.98, reflecting a decline of 97% from its peak in early 2021.​

Right now, this isn’t a lotto bet we’re willing to take. 

Consumer interest is fading.

App usage mirrors the slide in digital traffic, with monthly active users down -20%.

Some traders still see upside. The stock trades at 0.1 times expected 2025 sales. If rates drop and housing demand returns, bulls argue Opendoor could recover. It’s still the largest iBuyer in the U.S. and brought in six times more revenue than Offerpad last year. Insiders have been net buyers.

But we don’t see iBuying as a major—or minor—consumer trend moving forward.

The Problem with iBuying

• Thin margins. Buying and reselling homes is risky in a market where prices can swing quickly.
  

• Operational complexity. Renovations, logistics, and local market differences make it hard to scale.
  

• Limited traction. Most sellers still prioritize price over speed, especially when rates are high.

Bottom line: iBuying helped fill a need during the pandemic, but it hasn’t held up. Opendoor may still be standing, but we’re not betting on a comeback.