Shares of Zillow (ZG) - Get Zillow Group, Inc. Class A Report dropped after the online real-estate-services company reportedly paused its home-buying service as it works through a backlog of properties.
Zillow has pivoted from its core business of online listings and home-value estimates to buying and selling thousands of homes, according to Bloomberg.
But a backlog of homes has the company temporarily stopping its home-flipping service, Zillow Offers.
“We are beyond operational capacity in our Zillow Offers business and are not taking on additional contracts to purchase homes at this time,” a spokesperson for Zillow told Bloomberg in an email.
“We continue to process the purchase of homes from sellers who are already under contract, as quickly as possible."
Shares of Zillow were falling 6% to $89.24 in premarket trading Monday.
Zillow Offers invited homeowners to request offers for their homes and used algorithms to generate prices. If an owner accepted a bid, Zillow would buy the property, make light repairs and put the home back on the market.
The pandemic helped accelerate Zillow Offers popularity at a time when cash bids and fast closings were the norm, according to Bloomberg.
That helped lead to the oversupply and backlog the Seattle-based company is currently working through.
For now, the company plans to refer potential customers to traditional real estate agents.
The National Association of Realtors is scheduled to publish home-resales data for September on Oct. 21, giving markets a snapshot of the current state of real estate.
In August, the NAR reported a 2% decline in home resales, as the inventory of unsold homes decreased 1.5% to 1.29 million from July to August.