Zillow’s strategy of pairing its loan officers with invitation-only real estate agents is pulling purchase business away from the rest of the market. Its home loans unit grew purchase volume 55% in the third quarter while industry purchase originations fell.
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Zillow Home Loans originated $1.972 billion of purchase loans in the third quarter, up from $1.276 billion a year earlier. Year-to-date volume is up 79%. Over the same quarter, Zillow estimates industry purchase origination volume declined 4%.
“It’s why purchase mortgage revenue for us is outgrowing the category even with the category declining,” said CEO Jeremy Wacksman on the earnings call.
The company is almost entirely a purchase lender. It did just $4 million of refinance production in the third quarter, versus $5 million one year prior. Second quarter volume was $2.181 billion, with only $7 million coming from refi.
How the Preferred program feeds Zillow Home Loans
The volume growth came as Zillow expanded the share of buyer connections sent through its Preferred program, an invitation-only network of real estate agents. Zillow previously called the program Flex.
Executives reported double-digit adoption of Zillow Home Loans among customers working with Preferred agents. In Zillow’s oldest markets, that rate is approximately 20%.
“We are pleased that we continue to see double-digit customer adoption rates in Zillow Home Loans with our oldest markets at approximately 20% adoption rates, demonstrating that our integrated experience is adding value for both consumers and real estate agents,” said Jeremy Hoffman, chief operating and chief financial officer.
Wacksman framed the integrated model as the reason for Zillow’s confidence in mortgage growth. “I mean 80% of buyers need both the mortgage and the agent. They want that as a one-stop shop,” he said. “When we can offer that as an integrated experience, that’s what they’re choosing.”
He added that “a key part of this strategy is making sure that the Home Loans loan officer and the Preferred agent build a mutually beneficial relationship.”
The shift also changes how Zillow gets paid. Under its legacy advertising model, real estate agents used co-marketing dollars from lenders when bidding on leads, said Douglas Harter of BTIG. Under the Preferred model, Zillow captures mortgage revenue at origination, which can come six to 12 months later.
Why mortgage revenue still missed
The volume gains did not translate into the revenue analysts expected. Mortgage revenue rose 32% year-over-year to $70 million, but Keefe, Bruyette & Woods had forecast $81.3 million, putting the result 13.9% short. BTIG had forecast $81 million.
Hoffman attributed the miss to “
“We estimate that industry mortgage purchase origination volumes were down 4% for Q3, below our expectation for a low-single-digit decline,” he said. “We call out mortgage industry performance because the majority of Zillow buyers purchased their home with a mortgage.”
Harter tied the broader earnings miss to a weakening housing market and the “accelerated transition from the legacy ad model to Flex.” Zillow underperformed existing home sales for the first time since the fourth quarter of 2024, which helped spread the miss into mortgage, he said in a research note.
Zillow posted a $158 million net loss for the quarter, compared with $10 million of net income in the third quarter of 2025.
Zillow expects a steeper purchase decline in Q4
Zillow guided fourth quarter mortgage revenue to between $55 million and $56 million, with total revenue between $635 million and $665 million.
“Our revenue outlook includes our expectation for a decline in year-over-year mortgage industry purchase origination volumes of 10% to 15%,” Hoffman said. “This is down significantly from our prior industry expectation of mid-single-digits decline due to the sharp increase in mortgage rates we saw at the end of Q3 and into the start of Q4.”
Zillow expects 20% revenue growth in the fourth quarter as it scales outside its residential business, “with mortgage tailing off,” Harter said.
“The weakening housing market and bigger-than-anticipated model transition impact contributed to an 8-9% reduction in the 4Q revenue guide from the prior implied level,” he said. “Headwinds are expected to carry into ’27.”
