Despite increases in sector productivity and median home prices, recent events on commission distribution and high interest rates on mortgages have led the real estate business activity to slow down in the bottom half of sales transactions. The National Association of Realtors reported that existing home sales within the range $250-500K increased only 1% over the year. This $250-500K price range, along with the ranges below, comprises 62% of real estate transactions. Although the median house price has increased, the volume of sales may not make up for the compensation to catch up with the pace of other industries in the US economy.

Total Compensation estimates by the US Bureau of Labor Statistics seem to be dragged down by the number of transactions originated in the segments below the current median price of existing home sales, $419,300. According to data released by the National Association of Realtors, growth in sales is concentrated on properties with prices higher than $500K, which is way above the median price. Technically, the median price of $419,300 means that more than 50% of real estate transactions have seen stagnant growth, thereby explaining Total Compensation decreases.

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We have not run any analysis beyond the descriptive trend in the data to explain the Real Estate drop in Total Compensation. However, qualitative insights point toward high Interest Rates in Mortgages as the main driver for the decrease. The intuition gets reinforced as data for productivity show that the sector has made significant improvements since 2020. We will need more data and deeper analysis; however, it seems that Real Estate Professionals have become more productive during the aftermath of the Pandemic, which could imply better use of technology. Therefore, data may support the intuition about Interest Rates being the main driver for stagnant business activity.