CoStar Signals Spending Pullback at Homes.com as Profitability Timeline Sharpens

CoStar Group has confirmed plans to materially rein in spending at Homes.com, marking a clear shift from growth-at-all-costs to a more disciplined capital allocation strategy. The update, delivered alongside full-year 2026 guidance on Tuesday morning, was not warmly received by the market as CoStar shares closed more than 10% lower on Wednesday.

The announcement follows a strategic review of Homes.com that CoStar first flagged in Spring 2025, when management said it would reassess the scale and duration of investment behind the residential portal. This week’s update puts numbers against that intent.

Net investment in Homes.com, which sits in the chasing pack of portals behind Zillow in the US market, is set to fall by more than $300 million in 2026, down from roughly $850 million in 2025. Beyond that, CoStar expects to reduce net investment by a further $100 million or more each year through to 2030.

Homes.com remains firmly positioned as a core part of CoStar’s residential portfolio, alongside Apartments.com, Domain, OnTheMarket and Land.com. A company release pointed to a 337% increase in Homes.com subscribers since Q1 2024 as evidence that the portal has gained commercial traction.

The path to profitability, however, is now clearly staged. CoStar expects Homes.com to deliver revenue in excess of expenses exiting 2029 and to reach positive adjusted EBITDA in 2030. Management cited subscriber acquisition, deeper advertising products, builder partnerships and the Boost product as key revenue drivers, alongside continued cost reductions.

Boost, which allows agents and advertisers to amplify listings and visibility across the platform, has been positioned as a critical lever in improving yield per customer, particularly as overall marketing intensity moderates.

Technology, and AI in particular, also features prominently in the revised investment story. CoStar said its scalable AI platform is already delivering efficiencies in content creation, public records research, software development and lease data extraction. These savings are baked into the 2026 outlook, with further AI-driven enhancements planned across user experiences on all marketplaces, including Homes.com.

Andy Florance, founder and CEO, framed the shift as a natural evolution rather than a retreat. “Homes.com is an important part of our ecosystem; we now have a clear path to accelerate top-line growth and drive profitability,” he said, pointing to disciplined capital allocation and AI deployment as central to that trajectory.

In parallel, CoStar unveiled a new $1.5 billion share repurchase programme, underlining its confidence in medium-term cash generation even as Homes.com spending is wound down.