U.S. consumers’ real estate net worth declined 0.6% across all income brackets in the fourth quarter of 2025 as total real estate net worth remained between 2% and 2.5% below peak levels hit in the second quarter.

The fourth quarter marked the second consecutive quarter of declining real estate net worth, putting year-over-year growth at around 0.5%, according to a new analysis of Federal Reserve Board Distributional Financial Accounts (DFAs) by dv01, a data analytics firm owned by Fitch Solutions.

The DFAs present quarterly estimates of how U.S. household wealth is distributed across income levels. The analysis incorporates aggregate balance-sheet data from across major sectors of the U.S. economy and the Survey of Consumer Finances (SCF), a triennial snapshot of the balance sheets of a representative sample of U.S. households.

Top-heavy real estate wealth

The top 20% of earners owned nearly $27 trillion in real estate wealth in the fourth quarter of 2025, compared to the almost $21 trillion held by the bottom 80% of earners. Households in the top 1% of earners held about $6.07 trillion in real estate wealth, slightly more than the bottom 40% of income earners’ $5.98 trillion.

In the fourth quarter of 2022, as the Federal Reserve hiked its benchmark borrowing rate at the fastest clip in decades to rein in pandemic-era stimulus-fueled inflation, the top 20% of earners held $23.34 trillion in combined real estate wealth compared to the $18.62 trillion held by the bottom 80% of earners.

A discrepancy that dv01 says causes DFA publications to assign “nearly 0% home price appreciation to real estate assets since 2022” widened further in the fourth quarter. The most acute impact on the discrepancy emerges within the 40% to 60% bracket of middle-income earners.

“Mortgage debt among the bottom 60% grew $10 billion while their real estate assets fell $30 billion, pushing implied appreciation to actually 0%,” said dv01, despite the top 50 metro housing markets in the U.S. posting home price growth greater than 2% over that period and national home price appreciation coming in around 5%, the analysis said.

Aggregate net worth of U.S. consumers increased $2.1 trillion during the fourth quarter, with stock market gains accounting for about $1.8 trillion of that growth. A heavy concentration of net worth gains were accordingly concentrated within the top 20% of income earners, who owned more than $50 trillion, or nearly 87%, of the roughly $57.67 trillion in corporate equity and mutual fund holdings during the fourth quarter.

A K-shaped divide

Overall, the fourth-quarter DFA data presents a K-shaped economy that diverged further through the end of last year, dv01 concluded. But consumer credit trends identified in the DFAs also emphasize what dv01 calls a “continued re-alignment of balance sheets, especially among middle and lower income households,” in response to a string of significant economic disturbances, from the COVID-19 pandemic and multidecade high inflation to supply chain disruptions, multiple wars and ongoing tariff impacts.

On a “nominal basis,” dv01 noted that consumer credit per household is within 1% of levels observed in the second quarter of 2022, right before the Fed started hiking interest rates and “barely above pre-COVID levels” for every income cohort in the bottom 80% of earners, while falling below 2022 levels for the bottom 40% of earners.

The analysis attributes that decline in consumer credit across the lowest-income earners to households becoming “even more financially diligent in recent quarters, paring back consumer credit while prioritizing cash flows and long-term asset purchases, and using income growth and available cash for smaller purchases.”

As a result, consumer credit concentrations have moved up the income ladder, in line with observations that higher-income consumers are fueling an increasingly large portion of overall consumer spending, which accounts for roughly 70% of U.S. economic output. For more than three decades, observed dv01, 50% of all consumer debt has been held by the top 20% of income earners, with the top 1% comprising about 25% except for brief increases.

Since 2022, the top 20% of earners have held a record 62% of all consumer debt. This spike has lasted nearly four years, unlike previous surges which lasted “a few quarters” — prompting dv01 to suggest that the decline in consumer credit over recent years has been larger than that which followed the 2008 financial crisis.

“With worries about overstretched balance sheets and failing consumer credit re-emerging in light of the Iran war, the resilience of lower- and middle-income households remains remarkable,” said dv01.