Starter Homes Are Piling Up While Luxury Homes Fly Off the Market

The U.S. housing market is splitting into two distinct segments, with luxury home sales surging 6.2% year-over-year while starter home sales fell 5.4%, according to Zillow data. Starter homes are accumulating on the market with increased inventory (up 4.5%), more price cuts (25% of listings), and fewer bidding wars, while luxury homes face shrinking supply and strong demand driven by stock market gains among wealthy buyers. The divergence reflects a broader economic divide, as rising costs and slowed hiring weigh on potential starter-home buyers despite more favorable purchasing conditions.