Redfin Corp (RDFN) saw its shares plunge 9.16% in Thursday's trading session, as the real estate company grapples with a challenging housing market environment and analyst scrutiny. The significant drop comes amid reports of record-high housing costs and dwindling demand for second homes, factors that directly impact Redfin's business model.

According to recent data from Redfin itself, the median U.S. monthly housing payment reached an all-time high of $2,868 during the four weeks ending May 4. This surge in housing costs, coupled with elevated mortgage rates averaging 6.76%, has led to a notable slowdown in the spring homebuying season. Pending home sales have dropped 3.9% year-over-year, marking the largest decline in three months. Additionally, demand for second homes has hit a seven-year low, with second-home mortgages making up just 2.6% of all mortgages in 2024, the lowest share on record.

Adding to the pressure on Redfin's stock, Citigroup maintained a neutral rating on the company. This comes as investors also digest news about competitor Zillow Group's Q1 results, which showed mixed performance in the challenging housing market. The market's reaction to Redfin's stock suggests growing concerns about the company's ability to navigate the current real estate landscape effectively, especially as high housing costs and economic uncertainty continue to impact buyer behavior.