U.S. households put more wealth in stocks than homes

Federal Reserve financial accounts show U.S. households now hold a larger share of net worth in equities than in residential real estate, reversing a long-standing pattern in household balance sheets.

The change reflects growth in publicly traded shares, mutual funds and retirement accounts over the past two decades, while the residential property share of total household assets has declined.

Households gain equity exposure through employer-sponsored 401(k) plans, individual retirement accounts, mutual funds and exchange-traded funds. Equity allocations rose after market recoveries following the 2008 financial crisis and during the 2010s and early 2020s as stock prices increased.

Higher-net-worth households retain the largest equity stakes, holding most direct shares and substantial portions of pooled investment vehicles. Contributions to defined-contribution retirement plans and flows into target-date and other equity-weighted funds increased the amount of household wealth tied to the stock market.

Factors behind the shift include strong long-term returns-notably in large-cap technology and other sectors-broader availability of low-cost index funds and ETFs, and changes in employer retirement plan designs that moved investment decisions and risk to individual savers. In housing, constrained supply and higher mortgage rates in recent years limited new buying activity.

The Fed data also show liquid and marketable financial assets making up a larger slice of net worth than in earlier periods. Rising participation on brokerage platforms and larger retirement account balances contributed to higher aggregate equity holdings.

Economists note that equity exposure is uneven: many middle- and lower-income households continue to hold a larger share of wealth in housing and other nonfinancial assets. The Federal Reserve updates its financial accounts quarterly, providing ongoing data to monitor how the composition of household wealth changes over time.