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July 2025 Labor Cost Index for Real Estate Brokerages

In September 2025, AccountTECH, an established name in accounting software solutions for real estate brokerages, unveiled its July 2025 Labor Cost Index. This index reflects labor expenses as a percentage of income for U.S. residential real estate companies, shedding light on how effectively brokerages manage costs in an ever-evolving market.

The July 2025 Labor Cost Index stood at 5.12565%, demonstrating a notable decrease from the previous year's figure of 5.2312%. This marks a shift back to levels observed in mid-2022 and shows a slight reduction compared to the previous year. The Index is a critical metric as it benchmarks expense discipline across the industry and serves as a vital tool for brokerages aiming to refine their financial strategies.

Historical Insights

The trend of the Labor Cost Index has been fluctuating over the years:

• - 2025: 5.12565%
• - 2024: 5.2312%
• - 2023: 5.63725%
• - 2022: 5.14705%
• - 2021: 4.73485%
• - 2020: 4.14585%
• - 2019: 5.6115%
• - 2018: 6.18505%
• - 2017: 7.2376%
• - 2016: 5.5201%

The data indicates that the Index peaked in 2017, then declined to a low in 2020, ultimately rebounding through 2023 before stabilizing in 2025.

Divergence Between Profitable and Unprofitable Firms

One of the key findings from the July report is the stark difference in labor costs between profitable and unprofitable brokerages. Profitable firms reported a Labor Cost Index of 4.7418%, maintaining discipline with costs consistently under 5% of their income since 2019. The following yearly figures illustrate this commitment to cost control:

• - 2025: 4.7418%
• - 2024: 5.03795%
• - 2023: 4.8278%
• - 2022: 4.1038%
• - 2021: 4.58045%

Conversely, unprofitable companies faced a labor cost index soaring to 8.6392%, making it evident that maintaining labor costs below 10.6% of income is crucial for achieving breakeven. The figures for these firms over the years highlight the challenges they face:

• - 2025: 8.6392%
• - 2024: 8.6392%
• - 2023: 7.8718%
• - 2022: 8.8456%
• - 2021: 15.64705%

Labor Cost per Agent

Another noteworthy observation from the report is the decline in Labor Cost per Agent, which dropped to $349.19 in July 2025, down from a peak of $416.65 in July 2024, showcasing a shift in per-agent spending dynamics. This reduction in labor costs per agent suggests that brokerages are focusing on optimizing their workforce efficiency.

Conclusion

Mark Blagden, the CEO of AccountTECH, comments on these findings: “July's labor cost index illustrates that profitable brokerages continue to effectively manage their expenses, keeping them under control while unprofitable firms can't seem to escape the burden of high operational costs.” As the real estate market remains competitive, this data affirms that disciplined expense management will be paramount for brokerage success in the coming years.

The insights provided through the AccountTECH Real Estate Brokerage Financial Health Index Series serve as a crucial benchmark for industry participants, informing their strategic decisions and operational adjustments. Companies must leverage this data to enhance their financial health and drive profitability in a fluctuating economic environment.