Shares of Opendoor Technologies (NASDAQ: OPEN) were among today’s winners on the stock market as the home-flipping specialist was one of several real estate stocks to jump after the Bureau of Labor Statistics reported weaker inflation numbers than expected for October. There was no company-specific news out on Opendoor today, but the inflation news was enough to drive a significant movement in the stock.
The news makes it less likely that the Federal Reserve will continue to raise interest rates, which would be a boon for companies like Opendoor that are sensitive to mortgage rates.
As a result, the stock finished the day up 12.8%.
Monthly inflation was flat in October, according to data from the Consumer Price Index, a sharp deceleration from a 0.4% monthly increase in September. On a year-over-year basis, inflation rose 3.2% in October, its slowest pace since 2021.
Core inflation, which excludes food and energy and which the Fed looks at more closely than the overall number, was up 4%, its slowest pace of growth in more than two years. Monthly core inflation rose 0.2%.
Overall, the numbers show that inflation is slowly moving toward the Fed’s target of 2% annual growth, which means that the central bank is less likely to raise rates at its December meeting.
Opendoor is a so-called iBuyer, or instant buyer, meaning it gives prospective sellers offers on their homes and will buy them instantly if they’re accepted.
Once it purchases a home, it aims to sell for a higher price, but that business model has become challenging in the current housing market as mortgage rates have risen and prices have fallen from their peaks. It’s much easier to make money as an iBuyer when home prices are steadily rising.
While today’s inflation rate isn’t a sign that mortgage rates will fall anytime soon, it is a step in the right direction, and it should give active homebuyers more confidence that a housing market recovery is coming.
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