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The National Association of Realtors agreed to settle litigation over commission rules for U.S. real estate agents, clearing the way for possible changes in how Americans buy and sell homes, Bloomberg News reported. For homeowners and buyers, the proposed settlement marks an important shift, altering the way that agents communicate with each other about commissions in a move that may result in lower fees. “We believe the potential changes would likely accelerate commission pressure on buyer agents, and could support overall commission rates around a home transaction trending lower in the near term,” William Blair analysts including Stephen Sheldon said Friday in a note. The NAR, a trade group for U.S. real estate agents that counts about 1.5 million members, would pay roughly $418 million over about four years under the agreement, which is subject to court approval, according to a statement Friday from NAR. The Realtor group continues to deny any wrongdoing with how it structured a model rule for broker compensation. The NAR has come under fire from multiple lawsuits taking aim at the industry’s compensation structure, in which sellers pay a commission — often around 6% — that is then divided between representatives for both sides of the transactions. In many cases, sellers have been compelled to enter into commission-sharing arrangements as a prerequisite for marketing their homes on multiple-listing services, the industry’s main tool for publicizing listings.

U.S. annual home prices rose again in December, although housing price growth slowed during the fourth quarter of 2023 from the prior three-month period, Reuters reported. Home prices grew 6.6% on a yearly basis from an upwardly revised 6.7% in November, a survey released by the Federal Housing Finance Agency (FHFA) showed on Tuesday. The slight decrease in appreciation followed on the heels of the swiftest annual growth in November since December 2022. On a monthly basis, home prices increased 0.1% in December from an upwardly revised 0.4% in November. "U.S. home prices increased modestly over the course of 2023," said Anju Vajja, acting deputy director for FHFA's division of research and statistics. "However, the market showed signs of softening as house price appreciation was lower in the fourth quarter of the year than in the previous quarter." Prices increased 1.5% sequentially in the final three months of the year, down from 2.1% in the previous three months, FHFA said. After nearing 8% during the fourth quarter of 2023, the average rate on the 30-year fixed-rate mortgage has remained below 7% since early December 2023, according to Freddie Mac data. The Federal Reserve has held off on raising its benchmark overnight interest rate since July.

Housing market trends are shaping up in favor of a solid 2024 for U.S. homebuilders — as long as mortgage rates don't jump back to the highs they hit late last year, the Associated Press reported. Sales of new homes rose nationally in 2023 for the first time in two years, climbing 4.2% from a year earlier, according to the Commerce Department. This bucked the trajectory of the broader housing market, which remained mired in a deep slump as sales of previously occupied U.S. homes sank roughly 19% to a nearly 30-year low. Homebuilders were able to mitigate the impact of higher interest rates on home shoppers by lowering prices and offering incentives like paying buyers’ closing costs or buying down the rate on their mortgage. They also benefited from a chronically low inventory of existing homes on the market. Those market trends are expected to help give homebuilders a leg up again this year, Wall Street analysts say. Moody’s Investors Service projects that new U.S. home sales will increase 5% in 2024, citing strong demand among millennials and a healthy job market.

The National Association of Realtors appeared to hit rock bottom in October when a Kansas City jury delivered a $1.8 billion verdict, finding that the industry kept home-sales fees artificially high. But the existential threat to the powerful trade group was about to get worse, the Wall Street Journal reported. Copycat lawsuits have been filed around the nation. Dozens of real-estate brokerages are now defendants. Federal regulators are scrutinizing the industry more closely than they have in years. Brokerage executives are pressuring NAR to settle the legal claims nationwide, worried that more large verdicts could push residential firms and local real-estate associations into bankruptcy. They complain that NAR failed to convey the gravity of the threat. “There has been consistently an arrogant attitude of the senior officers” of the association, said Dave Liniger, chairman of brokerage franchiser Re/Max Holdings. “It just seemed to me that it was just like a solid wall of, ‘It’s our way, and we’re going to keep it that way, and we don’t care.’” Re/Max was also a defendant in the Kansas City lawsuit, but it settled before the trial. A NAR spokeswoman said the organization has always been committed to working with the industry to improve its policies and resolve the legal threats. The Missouri jury found that the powerful trade organization and two brokerages had conspired to keep fees paid to buyers’ agents high. Long before that fiasco, some real-estate executives had urged NAR to change the decades-old commission structure, but the organization refused. The industry now appears headed for significant changes in how buyers’ agents are paid, a system that NAR has fought for decades to protect. One possibility is that sellers would no longer decide upfront how much buyers’ agents get paid, giving buyers more power to negotiate. More buyers might opt to buy homes without using agents at all, which could save them money on commissions but might put less sophisticated buyers at a disadvantage.