Even as the housing market enters what looks to be a slowdown, the number of Realtors is nearing an all-time high. And competition may be even fiercer than when the National Association of Realtors‘ membership peaked in 2006 — though it’s hard to say for sure.
The number of Realtors documented by the trade group surged to 1.367 million in October 2018, up from 1.363 million the previous month and 1.306 million in October 2017.
That’s just shy of the trade group’s record-high of 1.371 million, set in October 2006 — about a year after home sales had begun to decline, ushering in a prolonged housing crisis and the Great Recession.
The number of Realtors and home sales rose roughly in tandem for much of the recovery (2012 to 2017), similar to how the two surged together during the housing boom.
But over the last year, the two numbers have been moving mostly in opposite directions, with NAR’s membership steadily increasing even as sales have trended downward.
The same pattern began in late 2005: home sales began to fall, but the number of Realtors continued to rise. NAR membership peaked in October 2006 and remained basically flat for another year, even as sales fell. Then, in late 2007, the number of Realtors began to decline precipitously, bottoming out at 965,000 in February 2012.
“NAR membership is linked to home sales and prices, with a lag,” said Mark Zandi, chief economist at Moody’s Analytics. “Home sales have gone flat over the past more than a year, and soon so too will membership.”
NAR provided the membership data to Inman but did not respond by press time to questions about what what the decoupling of the changes in sales and Realtor volume might say about the housing market.
One possible conclusion is that competition between agents is particularly robust: comparing NAR’s current membership to recent home sales data suggests that there’s significantly less business to go around compared to the last time NAR membership was this high.
When the number of Realtors peaked at 1.371 million in October 2006, existing home sales registered at a seasonally adjusted pace of 6.35 million — an annual rate of 4.63 sales for every Realtor.
NAR hasn’t yet released data for existing home sales in October. But in September, when NAR membership reached 1.363 million, existing home sales clocked in at a seasonally adjusted rate of 5.15 million, a three-year low — and an annual rate of 3.78 sales for every Realtor. That’s significantly less than the ratio of 4.63 that applied in October 2006.
“The decline in home sales per Realtor over the past decade likely reflects many fewer investor sales,” Zandi said. “In the housing bubble, a large number of home sales were to flippers. Flipping is much less common today.”
Realtor membership kept going up even after home sales hit a post-Great Recession peak of a seasonally adjusted annual rate of 5.72 million in November 2017. Home sales have since trended downwards, but the number of Realtors hasn’t stopped growing.
This doesn’t necessarily mean Realtor competition is hotter than when membership crested in 2006, said Bill Lublin, CEO of Century 21 Advantage Gold, a Philadelphia-based brokerage.
The number of what he calls “zero” Realtors — those who do no business at all — could be higher or lower today than their numbers in October 2006, so it’s difficult to gauge true competition for active agents, he said.
Lublin guesses that a larger share of Realtors are inactive today than during October 2006. If that’s the case, then — even though there are fewer transactions to go around — the competitive pressure of relative transaction scarcity could be eased or even offset by a higher rate of inactivity among Realtors today.
Either way, Lublin added, “There’s no question that we’re in a competitive market and that inventory is tight almost everywhere.”
It remains to be seen when, or if, a continued decline in home sale and price growth could cut into NAR’s ranks.
The October 2006 all-time high in NAR membership came 13 months after the housing boom peaked at a seasonally adjusted rate of 7.26 million annual sales in September 2005.
There may be other factors than market enthusiasm driving the increase in Realtors, such as the relative attractiveness of a real estate career compared to other job options, the lack of student debt required, and easing barriers of entry, perhaps facilitated by technology that lets Realtors more easily acquire licenses and work remotely.
Lublin attributes the rising number of Realtors to the entry of many millennials into the industry.
“This is a generation flooded with debt, looking for entrepreneurial opportunities that are the core of the real estate sales career,” he said.
NAR holds the restricted trademark on the word “Realtor,” and although used in common conversation synonymously with real estate agent, only those who are dues-paying members of the organization or one of its 1,400-plus state or local associations are allowed to use the term to describe themselves.
Editor’s note: This story has been updated to correct that Century 21 Advantage Gold is based in Philadelphia.