Federal court clears path for DOJ to reopen antitrust probe of national Realtors group

A federal court cleared the way Friday for the Justice Department to reopen an antitrust probe into the National Association of Realtors and its rules regarding home sale commissions.

In a 21-page opinion, a panel of the U.S. Court of Appeals for the District of Columbia Circuit reversed a lower-court decision that the Justice Department was barred from reopening its investigation because of complications arising out of a 2020 settlement the government eventually withdrew from. The appeals court sent the matter back to the lower court, where Realtors could appeal to the full D.C. Circuit or attempt to find a new angle to challenge the investigation.

The decision represents the latest blow for the powerful real estate group, which agreed in March to pay $418 million to resolve several class-action lawsuits alleging it conspired to inflate commissions. The NAR, which denies any wrongdoing, also said it would revise a compensation structure that typically carves out 5 to 6 percent of a home's sale price for agents.

While lawyers for the plaintiffs expectthe lawsuit settlement — if approved in federal court — to lower commissions, it would not preclude the Justice Department from further investigating the Realtors association, which counts 1.5 million members.

The Justice Department, which often does not publicly confirm ongoing investigations, did not specifically say it would restart the probe of the Realtors group. But Justice officials went out of their way to note the implications of Friday's ruling.

“Real-estate commissions in the United States greatly exceed those in any other developed economy, and this decision restores the Antitrust Division's ability to investigate potentially unlawful conduct by NAR that may be contributing to this problem,” said Assistant Attorney General Jonathan Kanter of the Justice Department's Antitrust Division.

The Realtors association said Friday that it was “reviewing today's decision and evaluating next steps.” Pointing to a dissenting opinion by U.S. District Judge Justin R. Walker, the association added that it “believes that the government should be held to the terms of its contracts.”

Walker wrote that the Justice Department should be precluded from reopening its investigation because the federal government previously said in a letter that it had closed the matter.

Scrutiny on the commissions system comes as housing affordability weighs on consumers. In the last quarter of 2023, the median U.S. sales price was $417,700, according to the Federal Reserve of St. Louis. Under a standard 6 percent commission, more than $25,000 would be earmarked for agents. In 2023, Americans paid close to $80 billion in commissions at a time when financing and other costs were elevated. As of the third week in March, a 30-year fixed mortgage rate hovered near 7 percent, close to the 20-year high reached in October.

In 2023, Americans paid close to $80 billion in commissions at a time when financing and other costs were elevated.