US households have achieved a historic milestone in their wealth allocation, with stocks now comprising 39.9% of household net worth while home equity has declined to 19.3%, according to Federal Reserve data reported by The Kobeissi Letter. This represents the largest share of household wealth ever held in equities in Federal Reserve records. The gap between the two measures has widened significantly to 20.6 percentage points, marking a dramatic shift from historical patterns where real estate traditionally dominated household balance sheets. As The Kobeissi Letter emphasizes, "Household wealth has never been this skewed toward equities."
The total household net worth reached $185.65 trillion over the reporting period, with $74.03 trillion directly and indirectly held in corporate equities and $35.81 trillion in owners' equity in residential real estate. As reported by The Kobeissi Letter, this represents a 12.6 percentage point increase in equity exposure since the third quarter of 2022, while housing's share has declined by 3.5 percentage points over the same period. Historically, real estate exposure peaked at 24.1% in the third quarter of 2005, one percentage point above equities. The divergence traces back to the last bear market, with equity exposure climbing significantly while housing's share lost ground over the same stretch.
The shift is primarily attributed to strong equity market performance, with the Nasdaq Composite closing at a record 27,122.09 on September 21, representing a 16.7% year-to-date gain. The S&P 500 finished at 7,764.70, up 13.4% in 2026, while housing markets have remained largely stagnant. According to The Kobeissi Letter, the Case-Shiller national home price index rose only 1.5% through June, with inflation running at 3.5%, leaving home values lower in real terms for the 13th consecutive month. Market returns explain most of the shift in household wealth allocation, with equities significantly outperforming real estate during this period.
The divergence between asset classes depends largely on future stock market performance, with S&P 500 forecasts ranging from 7,400 to 8,100 for the remainder of the year. As reported by Reuters, six of these targets already sit below Monday's close, while UBS, Citigroup, Oppenheimer, and HSBC represent the highest projections. Bank of America holds the lowest target at 7,400, which would imply a 4.7% decline from Monday's close. The next Federal Accounts release in December will provide insight into whether the third quarter further widened the gap between equity and housing wealth holdings, with the gap's direction largely dependent on what stocks do next.
