Home Prices and Commissions over Time

Brokers typically charge a commission based on a percentage of the home’s sale price. Over the past decade the average commission rate has remained relatively steady between 5.0 and 5.5 percent. As a result, the actual median commission paid by consumers rose sharply along with the run-up in home prices.

Unless broker costs were also rising sharply during this period of time, competition among brokers should have held commissions in check even as home prices were rising.

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Notes on Charts

Median Commissions Paid by Consumers, 1998-2007

• Inflation-adjusted median commission fees are calculated by multiplying commission rates (from REAL Trends 500©) by inflation-adjusted median home prices.
• The 2007 commission rate is assumed to be equal to the 2006 commission rate.

Median Home Sales Prices, 1998-2007

• Median home prices are from “U.S. Housing Market Conditions,” U.S. Department of Housing and Urban Development. Home prices are a weighted average of new and existing home prices, based on annual sales.
• Median home prices are converted into 2006 dollars with the consumer price index for all goods for urban consumers (CPI-U) from the U.S. Bureau of Labor Statistics.
• 2007 home prices are based on the first half of 2007.