<p>The U.S. Federal Reserve aggressively increased interest rates to a 20-year high in 2023, to fend off a surge in the rate of inflation. Consumers have since struggled under the weight of higher mortgage costs and less borrowing power, which has crippled the real estate market. In fact, U.S. existing home sales are currently hovering near a five-year low.</p>
<p>Fortunately, the Fed is in the process of reversing its ultra-tight monetary policy. The central bank cut interest rates three times at the end of 2024, and it delivered its third cut of 2025 earlier this month. Its latest forecast points to further cuts in 2026, but it will take time for all of these policy adjustments to work their way through the economy.</p>
<p><strong>Douglas Elliman</strong> <span class="ticker-mention inline-flex items-center font-bold">(DOUG <span class="ml-1 text-green-900">+0.41%</span>)</span> is one of America's largest residential real estate brokerage companies, so the sluggish housing market has been a headwind for its business. However, its stock is trading at an attractive valuation right now, so this could be a great opportunity for investors to buy with interest rates trending lower. </p>
<div><img alt="A real estate agent standing with their clients outside their home, preparing to list it for sale." width="880" height="587" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NDc4NzAvYS1yZWFsLWVzdGF0ZS1hZ2VudC1zdGFuZGluZy13aXRoLXRoZWlyLWNsaWVudHMtb3V0c2lkZS10aGVpci1ob21lLXByZXBhcmluZy10by1saXN0LWl0LWZvci1zYWxlLmpwZyZ3PTM4NDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NDc4NzAvYS1yZWFsLWVzdGF0ZS1hZ2VudC1zdGFuZGluZy13aXRoLXRoZWlyLWNsaWVudHMtb3V0c2lkZS10aGVpci1ob21lLXByZXBhcmluZy10by1saXN0LWl0LWZvci1zYWxlLmpwZyZ3PTM4NDA"/>
<p>Image source: Getty Images.</p>
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<h2>A leader in the luxury real estate market</h2>
<p>Douglas Elliman currently employs 6,600 agents in 113 offices across the U.S., with a focus on high-end luxury markets in New York, Texas, California, Florida, and more. The company was founded in 1911, so it has more than a century worth of experience when it comes to navigating housing market downturns.</p><div><div id="foolcom_sidebar_top_container"></div></div>
<p>Despite challenging conditions, Douglas Elliman sold $30.1 billion worth of real estate during the first three quarters of 2025 (ended Sept. 30), so it will almost certainly surpass its 2024 sales total of $36.1 billion by the time this year is over. </p><div><div><div>Advertisement</div><div><div></div></div></div></div>
<p>As I mentioned earlier, U.S. existing home sales are near a five-year low. Plus, according to Redfin, there were 528,769 more sellers than buyers during October, which was a record high. It's hard for brokers to deliver sales in this environment, especially at favorable prices, so Douglas Elliman is doing exceptionally well given the circumstances. </p><div><div id="in_line_article_pitch_container"></div></div>
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<p>US Existing Home Sales data by YCharts</p>
<p>As the positive effects of interest rate cuts flow through the economy, buyers should start to return to the market. The Fed's latest quarterly Summary of Economic Projections report, which was issued on Dec. 10, showed that the majority of Federal Open Market Committee (FOMC) members are in favor of even lower interest rates in 2026. That's good news for would-be homebuyers, so brokerage firms like Douglas Elliman should also reap the benefits.</p>
<h2>Growing revenue in tough conditions</h2>
<p>On the back of its higher sales, Douglas Elliman's revenue grew by 5% year over year to $787.6 million in the first three quarters of 2025. The company also carefully managed its costs during the period, resulting in $2.9 million in adjusted earnings before interest, tax, depreciation, and amortization (EBITDA). That was a positive swing from the $12.4 million adjusted EBITDA <em>loss</em> it generated in the year-ago period. </p>
<p>In October, Douglas Elliman also announced the sale of its property management division, using the proceeds to eliminate its outstanding $50 million convertible loan. The company is now debt-free, with $126.5 million in cash on hand, which it can invest in its business when the housing market rebounds. </p>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Douglas Elliman Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0RPVUcucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0RPVUcucG5nJnc9MTI4"/></div><div><h2>NYSE: DOUG</h2><div>Douglas Elliman</div></div></div><div><div><div>Today's Change</div><div>(0.41%) $0.01</div><div>Current Price</div><div>$2.48</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div>$219M</div><div>Day's Range</div><div>$2.45 - $2.50</div><div>52wk Range</div><div>$1.48 - $3.20</div><div>Volume</div><div>102K</div><div>Avg Vol</div><div>372K</div><div>Gross Margin</div><div>16.93%</div></div></div></div></section>
<h2>Douglas Elliman stock looks cheap compared to its rivals</h2>
<p>Douglas Elliman's price-to-sales (P/S) ratio peaked at 0.8 during the last housing boom in 2021, but its stock has since fallen out of favor among investors. Based on the company's trailing-12-month revenue of $1.03 billion and its market capitalization of $223 million, Douglas Elliman stock now trades at a P/S ratio of just 0.2. </p>
<p>If the real estate market bounces back in 2026 and drives an acceleration in Douglas Elliman's revenue growth, I think its P/S ratio could start trending higher. I'm not suggesting it will reach 0.8 again, but if it did, investors would earn a <em>fourfold</em> return from here.</p>
<p>The comparables also suggest a higher valuation might be in the cards. <strong>Compass</strong> is America's largest residential real estate brokerage company, so it's one of Douglas Elliman's biggest rivals, and its stock is trading at a P/S of 0.9. </p>
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<p>COMP PS Ratio data by YCharts</p>
<p>Douglas Elliman stock is up 47% so far in 2025, so it's crushing the <strong>S&amp;P 500</strong> index which is up just 16%. Considering it still looks cheap, I think it could be poised for another big year in 2026, especially as the positive effects of lower interest rates feed through to the housing market.</p><div id="article_pitch_container"></div><div id="promobox_container"></div>

DOUG

<p>The Federal Reserve's interest rate cuts are expected to benefit Douglas Elliman, a major real estate brokerage, as the housing market recovers. Despite current market challenges, Douglas Elliman has shown strong sales and revenue growth, becoming debt-free with significant cash reserves. Its stock is undervalued compared to rivals, presenting a potential investment opportunity as interest rates continue to decline and the market rebounds.</p>

- The U.S. Federal Reserve raised interest rates to a 20-year high in 2023, leading to a decline in existing home sales and affecting the real estate market.  
- Douglas Elliman, a prominent real estate brokerage, has managed to grow its revenue by 5% year over year, reporting $787.6 million in the first three quarters of 2025.  
- With the Fed signaling further interest rate cuts, Douglas Elliman is well-positioned to benefit from a potential rebound in the housing market, making its currently low stock valuation attractive for investors.

The Federal Reserve Just Delivered Spectacular News for This Under-the-Radar Real Estate Stock