Luxury Homes Are Booming While Starter Homes Stall
The housing market is starting to look a lot like the broader economy these days: split into two very different experiences depending on who you are.
Luxury homes, those in the top 5% of values and worth roughly $1.9 million nationally, saw sales rise 6.2% year over year in May. Meanwhile, starter home sales fell 5.4% over the same period, even though starter buyers actually have more inventory and more price cuts to choose from than they did a year ago.
The pattern mirrors what economists are calling a “K-shaped economy,” where stock market gains and wealth accumulation are fueling stronger demand at the high end, while rising everyday costs squeeze the budgets of would-be starter home buyers. It’s not that starter buyers don’t want to buy. Many simply can’t make the math work right now.
Average monthly housing payments for new purchases have climbed to around $2,150, driven by mortgage rates near 6.8% combined with home prices that have stayed sticky even as growth slows. The median price of an existing home hit an all time high of $440,600 in June, up 49.2% from June 2020.
For agents and sellers, this divergence matters. Luxury listings are moving with real urgency, while entry level homes may need more patience, sharper pricing, and stronger marketing to attract the buyers who are still in the game.
Whether you are buying your first home, selling at the entry level, or investing in the luxury market, understanding where your local market falls on this divide changes your strategy. If you have questions about how this K-shaped trend is showing up where you’re buying or selling, reach out anytime. I am always happy to share my insights!
