CoStar Group has reduced its Homes.com inside-sales team by nearly 40 percent and begun shifting representatives into the field as the company prepares to roll out a higher-priced advertising tier on the residential portal.
The inside-sales operation has fallen from 660 representatives at the end of 2025 to about 400, CoStar founder and CEO Andy Florance said Tuesday during the company’s second-quarter earnings call. CoStar is simultaneously expanding a field-sales team to 50 representatives across Washington, D.C., Tampa, Atlanta, Dallas and Chicago.
The changes come as CoStar moves into the next phase of its multibillion-dollar Homes.com push, focusing more heavily on monetizing its audience and improving the profitability of its residential businesses.
CoStar reported that Homes.com generated $28.5 million in second-quarter revenue, up 66 percent from a year earlier, while its subscriber count more than doubled to over 36,000. The average subscriber price reached $305 in June, and the monthly cancellation rate fell to 2.4 percent from 6.5 percent a year earlier.
CoStar’s broader residential segment, which includes Apartments.com, Homes.com, Domain and other businesses, posted $12 million in adjusted earnings before interest, taxes, depreciation and amortization during the quarter. It marked the segment’s first positive adjusted EBITDA since CoStar launched its major Homes.com expansion and monetization push in early 2024.
CoStar reported $925 million in total second-quarter revenue, up 18 percent year over year, and $55 million in net income, compared with $6 million a year earlier. The company lowered its expected 2026 revenue range to between $3.715 billion and $3.755 billion but maintained its adjusted EBITDA forecast of $780 million to $820 million.
Shares fell sharply following the report and touched a new 52-week low of $25.89 Wednesday morning before recovering some of the decline. CoStar was trading at about $29.15 shortly after 11 a.m. ET, down 3.9 percent for the day.
William Blair downgraded CoStar shares from Outperform to Market Perform on Wednesday, citing muted bookings, slower growth at Homes.com and competitive pressure at Apartments.com.
Homes.com takes its sales pitch into the field
Florance described the reduction in Homes.com’s inside-sales ranks as an effort to retain the strongest performers while building a field organization that CoStar believes will ultimately be more productive.
CoStar initially built the centralized inside-sales operation to bring Homes.com to market quickly, Florance said, but the company has long relied on field representatives at businesses including Apartments.com, LoopNet and its core CoStar platform.
“We always believed that a field organization would be the most productive,” Florance said. “But it takes years to build a good one.”
Despite reducing the number of inside representatives, Homes.com generated roughly the same level of net new bookings during the second quarter as it did during the first quarter, while production per representative increased 19 percent, CoStar reported. The company did not disclose a Homes.com net-new-bookings figure.
Florance told investors during the call that CoStar’s field representatives have historically produced about twice as much as inside representatives at some of its other businesses. The field approach also gives salespeople more opportunities to meet agents at industry events, open houses and brokerage offices, he said.
CoStar plans to expand beyond the initial five markets if the teams perform well, though Florance said building a national field-sales organization will likely take several years. He also said there is not a material cost difference between field and inside representatives because CoStar already has offices and infrastructure in many major cities.
Florance rejected the idea that the reduction represented a retreat from Homes.com. He said the company is instead becoming more selective about the representatives it retains while hiring field salespeople with more real estate, advertising and business-to-business sales experience.
Platinum listings arrive in Q3
CoStar plans to introduce a “Platinum” marketing tier during its third quarter, marking Homes.com’s first move into what the company calls “depth advertising.”
Platinum listings will receive enhanced placement in search results and across neighborhood and community pages, along with social media marketing, professional photography, drone photography and Matterport tours, Florance said. He added that the enhanced packages will be priced at multiples of Homes.com’s standard listings.
The new tier represents a potentially significant expansion of Homes.com’s business model. The portal has so far relied largely on base subscriptions sold to agents, but Florance said most portal revenue globally comes from sellers paying for greater visibility and promotion. CoStar expects the majority of Homes.com revenue to eventually come from depth advertising rather than standard subscriptions, he said.
The company has used similar products elsewhere in its portfolio. About 70 percent of Apartments.com customers purchase depth advertising, according to Florance, while enhanced advertising generates 91 percent of revenue at Australian portal Domain.
Homes.com subscribers paid to promote nearly 305,000 active listings during the second quarter, representing about 9.3 percent of the 3.2 million homes listed for sale in the U.S., according to CoStar.
Florance said the company believes agents “are earning an 11x return on investment” based on commission data shared during its previous earnings call. He pointed to the declining cancellation rate as evidence that subscribers are finding value in the product.
CoStar backs away from celebrity TV ads
CoStar is also changing how it promotes Homes.com to consumers, moving away from the expensive celebrity campaigns that defined the portal’s initial national rollout. Florance said the company is shifting away from “very expensive celebrity production” and was “less than thrilled” with the results it saw from linear television and some streaming placements.
The company plans to place greater emphasis on search-engine marketing and digital advertising that can generate leads more directly.
“We’re going further down the funnel,” Florance said. “We’re not working the upper brand identity as much.”
Homes.com launched a high-profile national advertising campaign in early 2024 featuring celebrities including Dan Levy, Heidi Gardner and Lil Wayne. CoStar spent heavily to build consumer recognition for the portal as it sought to challenge Zillow, Realtor.com and Redfin.
Florance said newer ads will focus more directly on Homes.com’s functionality, including its artificial intelligence search tools, and should cost less to produce.
The company will continue to maintain an aggressive search-marketing presence during the remainder of the year, he said, while developing additional business-to-business campaigns intended to generate more sales demonstrations for Homes.com representatives.
CoStar also expects residential marketing expenses to decline during the second half of the year because of normal seasonal patterns, outgoing Chief Financial Officer Christian Lown said.
