5 Months After NAR Settlement - Commission Rates Back to Normal

January 21, 2025 - Boston, MA - AccountTECH, the leading real estate accounting software provider, just completed a study showing unexpected improvements in real estate commission rates in the wake of the National Association of Realtors (NAR) Settlement, finalized in August 2024. At the 60-day mark, preliminary analysis suggested that both buyer and seller commission rates were in a two-month pattern of trending lower compared to the prior year. However, by 5 months post-settlement, a reversal of this trend has emerged, raising questions about the long-term implications of the settlement on commission structures.

Seller Commission Rates: Slight Uptick Year-Over-Year

The latest data indicates that seller commission rates have slightly increased compared to the same period last year. For the fifth month post-settlement (ending Jan 17, 2025), the average seller commission rate was 2.73%, compared to 2.72% in the previous year, marking a 0.01% percentage point increase. 

Seller commission rates started moving in the first month after the NAR Settlement, trending down from 2.79% to a 2.75% average Seller commission rate. The seller commission rates continued decreasing to a low of 2.69% at the 90-day mark. Since then, Seller commission rates have started moving back up and averaged 2.73% for the period ending January 17, 2025. This consistent upward trend over the past months suggests a modest recovery or stabilization in seller commissions, countering initial fears of significant rate declines.

Buyer Commission Rates: Recovery After Early Decline

Buyer commission rates, which initially showed a downward trend within the first 60 days post-settlement, have stabilized and returned to prior-year levels. By the fifth month, the average buyer commission rate is 2.55%, identical to the rate observed during the same period in the previous year. This marks a recovery from the earlier declines of 0.05 to 0.055 percentage points, as observed at the 30- and 60-day intervals.

Key Trends Over Time

The following table summarizes the changes in commission rates at 30-day intervals after the NAR Settlement:

Visualizing the Trends

The graph below illustrates the changes in commission rates for sellers and buyers over the 150 days following the settlement. It highlights the initial dip in buyer rates, their subsequent recovery, and the slight upward trend in seller rates.

Analysis and Implications

The early declines in buyer commission rates suggested that the NAR Settlement might push these rates downward, aligning with predictions from industry analysts and legal professionals. However, the reversal observed after 90 days indicates that market forces, rather than the settlement itself, may have a stronger influence on commission structures. Factors such as inventory levels, interest rates, and regional economic conditions could contribute to these shifts. 

For sellers, the slight year-over-year increase in commission rates may reflect a stabilization in the market. Agents may maintain or negotiate higher commissions despite the settlement’s provisions.

Conclusion

The 5-month data post-settlement underscores the complexity of predicting the long-term impact of regulatory changes on market dynamics. While initial trends indicated potential downward pressure on buyer commissions, the recovery to prior-year levels suggests a more nuanced outcome. Sellers, meanwhile, have seen a slight but consistent increase in commission rates, providing a degree of reassurance to real estate professionals concerned about shrinking revenue streams. 

These results were derived from an analysis of transactions from 1,290 real estate offices. For this study, only transactions that became pending during the five-month comparison periods were examined. The analysis covered 224,176 transactions from these offices in total. 

As we continue to monitor commission rates and broader market activity, future analyses will provide further insights into whether these trends solidify or shift again in response to evolving market conditions.

About AccountTECH

For over 25 years, AccountTECH's team of real estate accountants and software engineers have been building tools that increase the efficiency of brokerages. Their latest flagship product is darwin.Cloud - a 4th generation evolution of their popular back office accounting software.The team is constantly adding automation and integrations towards the goal of single-point-of-entry. Their motto is: data entry can happen anywhere, but everything winds up in darwin. In their work with clients, partners, and each other, they bring integrity to every interaction and every line of code.

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