After years of heavy investment in building a fourth competing real estate search portal, CoStar said on Wednesday that it would slash its spending on Homes.com for the next several years as it looks to turn the outfit profitable.
The company said in a U.S. Securities and Exchange Commission filing that it would cut net spending on the portal by $300 million this year — or over 35 percent year over year — and over $100 million each year after that through 2030. That is a sharp drawdown from the estimated $850 million the company said it invested in the portal in 2025.
The portal’s parent company said in the filing that it was seeking to have Homes.com generate more revenue than expenses by the end of 2029 through a mix of trimmed costs and continued subscriber, advertising and partnership growth.
“The Company is implementing its proven playbook to continue to scale Homes.com and drive profitability,” CoStar wrote in the filing.
The cutback follows mounting pressure from investors who questioned CoStar’s aggressive move into the residential space after dominating the commercial real estate space.
CoStar acquired Homes.com in 2021 and began looking to scale it into a force in the residential space on par with Zillow, Realtor.com and Redfin. The company turned heads in 2024 when it unveiled a $1 billion marketing investment to grow awareness for Homes.com, including via celebrity-studded Super Bowl ads.
The company — which historically was a giant in commercial real estate but had a smaller footprint in the residential sector — also undertook lower-profile yet controversial efforts to generate awareness and revenue, including sending direct mailers to homesellers asking them to pay to boost marketing of their listing via Homes.com.
Homes.com has reported strong subscriber growth among real estate agents who pay the portal for various services, including a marketing “boost” across the Homes.com network.
The investment and subscriber growth, however, weren’t enough to translate into gains in the stock market. CoStar’s stock is down nearly 10 percent from a year ago and about 30 percent from five years ago.
Last April, the firm shook up its board of directors, and it created a committee that was focused on reviewing “the Company’s ongoing investment in Homes.com [to ensure] an appropriate timeline for profitability,” according to a company statement.
Around the same time, the investment firm Third Point issued a report that included an analysis of CoStar and questioned its heavy investment in Homes.com.
“After several years of uncertainty, we believe it is time for CoStar to begin the journey of meaningful self-help,” Third Point wrote in the April 30 letter.
Specifically, the firm wrote, “expanding losses at Homes.com have obscured rapid growth in the core business.”
Analysts with the investment firm William Blair offered tempered optimism for the spending cuts, saying the move should allow the Homes.com model to “marinate” in the meantime.
“We are encouraged by the guardrails around Homes.com spend,” analysts with William Blair wrote in a quick reaction to the news.
William Blair had initially believed CoStar should trim its investment by $200 million, the analysts wrote.
“While we believe investors will appreciate the spending reductions and added granularity around the path to profitability, some may have been looking for a faster timeline to profitability than 2030,” they wrote.
Indeed, CoStar’s stock remained down around 5 percent after the announcement on Wednesday.
CoStar said the company as a whole was leaning into artificial intelligence to improve efficiencies and the user experience “on all marketplace platforms.”
“Homes.com is an important part of our ecosystem,” CoStar CEO Andy Florance said in a statement. “We now have a clear path to accelerate top-line growth and drive profitability.”
