Zillow, Other Online Home Listings Stocks Drop as Google Tests Ads

(Gabby Jones/Bloomberg)

Key Points

• Google is testing home for-sale ads at the top of search results in partnership with ComeHome by HouseCanary.
• Shares of Zillow fell 7.8%, CoStar Group dropped 6.4%, and Rocket was down 2.8%.
• The experiment displays property listings and information alongside existing real estate agent ads on Google Search.

The turf war over real estate listings could get a big new entrant. Stocks for companies with home for-sale listing websites fell sharply on Monday on news that Alphabet’s Google is testing its own ads at the top of search results.

Google is incorporating the ads into Google Search in some parts of the country, a Google spokesperson said.

“This is a small experiment in partnership with ComeHome by HouseCanary that displays property listings and information alongside existing real estate agent ads on Google Search,” the spokesperson said.

The news gained traction on social media over the weekend after real estate strategist Mike DelPrete posted about the find on his blog on Friday.

Shares of Zillow were down 7.8%, to $68.89 on Monday afternoon. The drop puts Zillow on track for its largest decline since February and lowest close since November, according to Dow Jones Market Data.

Zillow wasn’t the only home listings company that appeared to be knocked by the news. CoStar Group, which owns the listings portal Homes.com, was down about 6.4%, and on track for its lowest close since July 2022. Shares of Rocket, which purchased the real estate brokerage Redfin earlier this year, were 2.8% lower, on track for its lowest close since November.

(News Corp, which owns Barron’s, also runs home listings website Realtor.com. News Corp Class B stock was down 1.16% in late afternoon trading Monday.)

Barron’s replicated the results on a mobile browser Monday morning, though the results didn’t appear to be available to all users. A user who searches for “homes for sale in Austin,” for example, would see a carousel at the top of search results featuring photos, prices, addresses, and stats like bedrooms, bathrooms, and size of homes for sale.

Clicking on the add brings users to a page with more specific information and the option to request a tour or contact an agent. “Google selects a top-rated real estate agent near you who typically replies in a few hours,” the page says.

The experiment adds to Zillow’s existing real estate agent ad offerings, the Google spokesperson said. The search giant sources the ads’ property information through its partnership with HouseCanary, and agents don’t pay for the property information that gets shown in the ads. The tool is being tested in places like Denver, Los Angeles, Miami, and Houston.

It’s a risk investors were attuned to—even if they didn’t expect the news over the weekend. “The possibility of Google entering the property listings category has long been viewed as a tail risk for the property portals and other relevant real estate industry players,” KBW analyst Ryan Tomasello wrote in a Monday note.

The news comes at a time of challenges in the home listings space as buyers remain largely priced out of the market, and Zillow is defending itself in several high-profile lawsuits. “The test is a negative for Zillow and builds upon other headwinds weighing on the shares,” Gorden Haskett analyst Robert Mollins wrote in a note.

“All said, we remain buyers, as the test is unlikely to have an immediate impact on Zillow’s leading market share or ability to drive mid-teens revenue growth and margin expansion in 2026,” the analyst added.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com