Real estate brokerage profit margins show signs of stabilization

Real estate brokerages may no longer be at the profitability peak they hit during the height of the pandemic housing market, but their margins are showing signs of stabilization after the market rapidly shifted in 2022 due to the interest rate hikes, according to data published by real estate brokerage accounting software and services provider AccountTECH. 

The firm’s May 2025 EBITDA Margin Index stood at 3.4962%, which AccountTECH said reflects “continued resilience and cautious growth in a market with high interest rates and decreased transaction sides.” 

The index benchmarks the profitability of over 150 brokerages across the country and tracks EBITDA earnings as a percentage of revenue for U.S. brokerages that demonstrate consistent GAAP-compliant financial reporting. Both independent firms and national franchises are included in the index.

Year-over-year, the index was up 6% from May 2024, however, it is less than two-thirds the value of the May 2022 index number, when the EBITDA margin was 5.5947%. The May 2025 value, however, is close to the May 2020 value of 3.8506%, recorded at the start of the COVID-19 pandemic.

“Real estate brokerages are proving remarkably adaptable,” Mark Blagden, the CEO of AccountTECH, said in a statement. “After the challenging market conditions of 2022 and early 2023, we’re now seeing signs of stabilization and cautious optimism. May’s EBITDA improvement isn’t just a seasonal bounce—it reflects more disciplined financial management across the industry.”

Data tracks with other firms

The co-founder of RealTrends Consulting, Steve Murray, says his firm’s data shows similar trendlines.

“It has been tough out there for a while,” Murray said. “First, the market slowdown and the downturn in sales, and now we are seeing perhaps the fiercest competition ever for agents.”

Murray added that as the market has cooled the top performing agents are responsible for an even larger share of home sales, which is great for their individual businesses, but it hurts brokerages’ financials as those top agents cost more to keep around due to their higher commission splits.

When broken down between profitable and unprofitable firms, for the firms with positive EBITDA, the EBITDA index value is 5.9121%. According to AccountTECH’s data, the positive EBITDA group has “held relatively steady over the past seven years, with May margins typically ranging from 5.29% to 7.25%”

On the other end of the spectrum, for the unprofitable brokerages, the average EBITDA margin in May was -5.0003%. AccountTECH’s data shows that this group has historically posted EBITDA losses ranging from -4.21% to -9.74% in May.

“The firms [that] are thriving now are the ones who invested in automation, restructured their compensation models, and improved their backend operations,” added Blagden.

Given that May is typically a strong month for brokerage profitability as transactions from the March and April homebuying season close, the May 2025 EBITDA margin of 3.4962% is ok, but not great, according to AccountTECH.

Data shows that the seven year average for May is 4.69%, over a full percentage point higher than the May 2025 number. Despite this, the May 2025 index reading was the highest EBITDA margin recorded by AccountTECH in the past 12 months. So far in 2025, the EBITDA margin has risen roughly six percentage points from -3.442% in January to its current value.