CoStar Climbs 6% as Housing Stocks Rally Despite Weak Sales Data
CoStar shares rose 6.2% after Keefe Bruyette lifted its price target to $34 from $29, though the stock quickly exceeded that level. Zillow, Lennar and Rocket also gained sharply even as Redfin reported pending home sales fell 1.9% and mortgage rates stayed in the mid-7% range. Investors appeared to bet on a housing recovery, while CoStar's expected earnings growth depends on reducing Homes.com spending.
Keefe Bruyette analyst Ryan Tomasello lifted CoStar’s price target to $34 from $29 while retaining a Market Perform rating. The revised figure sat only slightly above the prior close, and CoStar’s 6.2% advance quickly moved shares beyond it. Zillow, Lennar and Rocket posted larger gains despite no company-specific upgrades, suggesting a sector-wide move.
CoStar’s Homes.com investment is central to its earnings outlook. The company aimed to reduce net spending there by over $300 million this year from $850 million in 2025, and its residential segment reached positive adjusted EBITDA in the second quarter. Analysts project normalized EPS rising from $0.87 in 2025 to $1.36 this year and $2.34 by 2028. Third-quarter results are due Oct. 27.
The rally may mainly affect investors and employees tied to housing-related firms, while homebuyers could see little immediate change because mortgage rates remain elevated and pending sales are weak. If CoStar’s cost cuts improve profitability, it could strengthen its competitive position against Zillow, potentially influencing how home listings and real estate data are priced and accessed. Broader housing recovery bets could also shape confidence among builders, lenders and households considering moves, though the data do not yet confirm a turnaround.