US Housing Market Splits, Benefiting Luxury Buyers While Sidelining Others

The U.S. housing market is exhibiting a stark division along financial lines, with entry-level buyers increasingly priced out while the luxury real estate market remains active, according to a report released Wednesday by Realtor.com. This trend highlights persistent economic inequality, often described as a K-shaped economy.

Traffic to listings for homes priced below $370,000 has fallen sharply, dropping from 54.2% of online home-shopping traffic in 2021 to just 42.8% in 2026. This double-digit decline is attributed to affordability constraints and the withdrawal of price-sensitive shoppers, according to Jiayi Xu, a senior economist at Realtor.com.

Concurrently, the inventory of entry-level homes has also decreased, further signaling affordability challenges. In contrast, the luxury end of the market is demonstrating resilience. Both the number of luxury home listings and buyer engagement have remained strong, supported by well-capitalized buyers who continue to actively participate in the market.

Despite some recent price moderation nationwide, the decline has not been enough to re-engage sidelined buyers. Even with a reduced supply of lower-priced homes, competition for these listings has not intensified as might be expected in a typical constrained market. "Engagement with lower-priced homes has fallen to its lowest level since 2019," Xu stated. "The data suggest that many households who would once have competed for these homes are no longer actively shopping at all."

The report suggests that while the market may appear more balanced on the surface due to sustained activity at the top end, this balance does not reflect broad-based market health. The continued activity in the luxury segment is largely sustained by buyers with significant financial resources.