As nearly everyone has weighed in on the commission issue, with no real consensus on exactly how recent policy changes will affect real estate agent pay, the Federal Reserve (Fed) this week put out its own analysis—concluding like so many others have, that it is too early to make any predictions about the National Association of REALTORS®’ (NAR) settlement in the long term.
At the same time, the analysis concludes that those policy changes could lead to larger shifts in the industry, citing a 2025 paper that estimated “decoupling” commissions should reduce rates by 53% in the long term.
“The settlement has the potential to upend the traditional model of residential real estate broker compensation, in which the buyer’s and seller’s agents were each paid as much as 3% of the home value by the seller. News reports suggest that many real estate agents are considering leaving the industry,” the Fed analysis said.
Looking at data preceding the 2024 changes, which most notably required buyer agent agreements and banned commission sharing on the MLS, Fed analysts Rupkatha Banerjee and Andrew Paciorek noted that commission rates have long been trending down, and found no effect on commissions from states that previously required buyer contracts or banned buyer rebates.
“The settlement could lead to more substantial changes to business models and agent commissions going forward,” the analysis noted. “Press reports suggest that sellers’ agents have found ways of sharing information on commission rate offers outside of the MLS. In addition, the NAR has relaxed its Clear Cooperation Policy, leaving more freedom for listing agents to forego or delay listing a property on the MLS in the first place. These sorts of adaptations make it difficult to predict the long-run effects of the settlement.”
The analysis was explicitly precipitated by the NAR settlement and real estate upheaval, with the researchers relying on Cotality (formerly CoreLogic) data “that includes the commission rates advertised to buyers’ agents.” They also affirm one of the longest-running criticisms of commission practices—that consumers are discouraged from offering lower commissions.
“We conclude that local norms likely matter for commissions, as individual sellers and buyers find it costly to deviate from the norm, given the possibility of incurring substantial losses from poor performance of low-commission listings on the market or lack of cooperation from brokerage agencies,” the analysis said.
The Fed analysis does not rely on any data from after the settlement, instead looking at transactions from 1995 to 2023. During that time period, buyer commissions fell from 3% to 2.7%, which the Fed attributed at least somewhat to rising home prices, which are negatively correlated with commission rates.
Since the settlement, data has been decidedly mixed. RISMedia’s own study found commissions falling sharply in the first few weeks after settlement changes went into effect, while studies since then appear to show commission rates stabilizing or even rebounding—notably, relying on very different methodologies.
Also notable, the Fed found “densities” of buyer commission rates around industry norms—mainly at 3%, 2.5%. The researchers note they did not look at seller commission rates, but assumed that commissions were split equally between buyers and sellers—something that is far from certain, with RISMedia’s data showing that listing agents averaged 0.35% higher commissions than buyer agents in 2023-24.
But based on that clustering, the researchers say that “(t)his persistence may be explained by steering and how poorly low-commission properties fare.”
“Brokerage firms that offer low commissions are less likely to obtain cooperation from agents from larger firms, who make up the majority of the real estate market. Thus, they are unable to compete with full-commission brokerage agencies,” the analysis said, citing a 2017 paper that claimed to find significant evidence of steering in an analysis of MLS data in Massachusetts.
In areas with lower average commission rates, the Fed analysis found that “densities” are not as strong, and that when that is a “break down” in norms—for instance, when the average rate falls from 3% to 2.5%—there is overall more variation in rates.
Looking at states with rebate bans or buyer agreement requirements, the Fed analysis found that after controlling for home prices, there was no statistically significant difference on “advertised” commission rates.
The two Fed researches also note that “in theory,” the rise of Zillow and easy access to online real estate listings should have lowered commission rates “by minimizing the informational advantage of working with an agent.”
“But the existing literature shows that despite these advances, agent commissions have consistently remained high,” they wrote.