Positive Signals for Compass & The Market

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Compass’s for sale listings are up 15 percent compared to the same time last year – just one example of rising activity across the U.S. real estate market.

Why it matters: An increase in for sale listings is a welcome sign of more sellers coming to market, good news for businesses in the real estate ecosystem, and a promising start to the year after a depressed 2023.

  • Compass, the nation’s largest brokerage based on sales volume, currently has 2,000 more listings than the same time last year – and that number is increasing.

 
 

On a year-over-year basis, the number of Compass listings has gone from down 8 percent in July to up over 15 percent at the end of January – a significant change in fortunes.

  • Aside from being good for buyers, this is good news for Compass – more listings should lead to more sales and more commission revenue.

 
 

New listing volumes and revenue are indirectly correlated (because of the time lag between a listing and a sale). 

  • In Q3 2023, Compass’s listing volumes were down 5 percent and revenue was down 10 percent year-over-year (YoY).
     

  • But things are looking up: Compass listing volumes were up 3 percent in Q4 and are currently up 13 percent in Q1 – positive signs that won’t appear in Q4’s financials but will land in Q1 2024.

 
 


And Compass is not alone; according to Redfin’s national data, new listings are up significantly across a number of major U.S. markets.
 

 
 

The increase in activity appears to be driven by – wait for it – interest rates.

  • With the recent drop in rates, mortgage demand has spiked to the highest level in six months.

 
 

The bottom line: From a transaction volume standpoint, 2024 is off to a promising start.

  • From a business perspective, more transactions means more commission income – the $90+ billion that fuels so much of the industry, from agents to brokerages, from portals to tech vendors. 
     

  • It’s still very early, but these are signs that would signal a positive shift in the market and, therefore, good news for the ecosystem of businesses that surround the transaction.