America’s housing market is increasingly splitting along a K-shaped trajectory: wealthy buyers are continuing to spend on luxury homes, while high mortgage rates are keeping many middle-income Americans on the sidelines.
The divide is particularly stark in the San Francisco Bay Area, where artificial intelligence wealth is helping drive a surge in high-end home sales even as the broader U.S. housing market remains near multi-decade lows.
The numbers illustrate the widening gap. The median luxury-home price rose 4.3% to about $1.37 million in the first half of 2026, compared with a 1.4% increase for middle-market homes.
Luxury sales also outpaced or held up better than middle-market sales in 44 of the nation’s 50 largest metro areas, according to a report published by the Associated Press on Wednesday.
Bay Area Sees Sharpest Divide
San Francisco luxury sales jumped 39.3% in the same period, more than double the 15.1% rise for middle-market homes, the report said. Redfin chief economist Daryl Fairweather told the AP that affluent buyers are largely indifferent to mortgage rates or price, saying they simply “want the home they want” and have the money to get it.
Associated Press reporter Alex Veiga described the pattern as a “K-shaped” divide in housing, with wealthier buyers pulling further ahead while many would-be purchasers stay on the sidelines.
IPO Anticipation Adds Pressure
Much of the urgency is tied to potential IPOs from OpenAI and Anthropic, both of which filed preliminary paperwork in June. A Redfin analysis cited in the report estimated combined employee IPO earnings from the two companies could cover nearly a third of all homes in San Francisco.
Broader Market Stays Frozen
Outside the luxury tier, high mortgage rates continue to lock in sellers. Roughly half of outstanding U.S. mortgages carry rates below 4%, against a current 30-year rate near 6.7%, leaving active homebuyers at a record-low 967,000 in July, per Redfin data, with sellers outnumbering them by nearly 500,000.
Ryan Serhant, founder and CEO of Serhant, said homeowners with 3% mortgages are effectively "imprisoned in their own homes" because selling would mean giving up historically low borrowing costs.
That freeze continues to weigh on renovation-linked retailers like Home Depot Inc. (NYSE:HD), which said this week it sees “no sign” of a turnaround despite steady sales growth.
The result is a housing market increasingly divided between those who can afford to buy despite higher rates and those who cannot, or who are unwilling to give up historically cheap mortgages.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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