Treasury Secretary Scott Bessent declared the “K-shaped economy” over this week, but housing transaction data shows the divide between entry-level and move-up buyers still widening, according to a Realtor.com analysis published Tuesday.
“I got sick of hearing about this K-shaped economy,” Bessent said in a CNBC “Squawk Box” appearance. “I can say here definitively, the K-shaped economy is over.” The term describes an economy in which different income segments move in sharply different directions β with higher earners prospering while lower- and middle-income households fall behind, forming the shape of the letter K. Bessent argues stronger wage growth among lower-paid workers is now closing that gap, describing “more of a C economy where the lower end of wage earners are finally calling it back.”
Housing data tells a different story
Realtor.com’s own transaction-data analysis finds no sign of that convergence in housing. Sales of homes priced under $200,000 fell 11% in 2025 from the year before, while sales between $1 million and $2 million rose 3.3% β the only price tier to post annual growth.
The divergence widened further in early 2026: sales below $200,000 were down 14.4% year over year through the first five months of the year, compared with a decline of just 0.6% for the $1 million-to-$2 million tier. The strain at the bottom of the market echoes RealtyWire’s coverage of Redfin’s finding that the income needed to afford a typical U.S. home remains near a record $110,000.
“That’s the real edge of the K shape,” said Hannah Jones, senior economist at Realtor.com. “‘Starter homes vs. affluent move-up buyers,’ not ‘everyone vs. the ultrawealthy.'”
The composition of sales has shifted accordingly. Homes under $200,000 made up 20.5% of transactions in 2024 but fell to 19.4% of transactions in 2025 β the largest share decline of any price tier β while the $1 million-to-$2 million segment grew from 5.6% to 6.2% of transactions. Through May 2026, the entry-level tier’s share had slipped further, to 18.7%, while the $1 million-to-$2 million tier climbed to 6.6%.
“Bessent’s C-shaped argument is that lower earners are now catching up, which would imply growth broadening back into value and entry-level segments rather than staying concentrated at the top,” Jones said. “Housing doesn’t support that story right now. The entry-level tier isn’t stabilizing. It’s still the fastest-declining segment nationally in both periods we measured, and it got worse, not better, heading into 2026.”
Jones called the pattern β falling volume at the bottom, rising share in the upper-middle tier, even as total sales shrink β a “textbook K-shape signature.”
Regional divides are even wider
The split is most pronounced in the Midwest, where sales below $200,000 fell 16.9% so far in 2026 compared with the same period in 2025, even as transactions between $1 million and $2 million rose 9.8% β a 26.7 percentage-point gap, the widest of any region tracked. The South showed a similar pattern, with entry-level sales down 12% against 0.9% growth in the $1 million-to-$2 million tier.
Daniel Cabrera, owner of Sell My House Fast SA TX, told Realtor.com the divide is visible on the ground: “The luxury market has a shrinking supply and bidding wars, while the entry-level segment has an increasing inventory, due to the fact that the property sits, as the folks that would buy it cannot qualify.” He described it as “one and the same city experiencing two opposing weather phenomena.”
What it means
Verified facts: Realtor.com’s transaction-level data shows entry-level home sales declining faster than any other price tier in both 2025 and the first five months of 2026, while the $1 million-to-$2 million tier is the only segment posting consistent annual growth.
Attributed interpretation: Bessent attributes broader economic improvement among lower-wage workers to a narrowing K-shape; Realtor.com’s Jones argues the housing data specifically contradicts that narrowing, since the entry-level housing tier continues to lose ground rather than stabilize.
RealtyWire analysis: Financing costs are the likely wedge between the two accounts. Mortgage rates have risen roughly half a percentage point over the past year, a marginal move that barely registers for cash-flush buyers at the top of the market but can price out buyers already stretched thin at the entry level. That dynamic β rather than a reversal in overall economic conditions β may explain why wage gains among lower earners haven’t yet translated into stronger entry-level home sales.
What to watch
Realtor.com’s Jones said the firm will continue tracking transaction-level price-tier data through 2026 to determine whether the entry-level segment’s decline stabilizes or continues to widen relative to the middle and upper-middle tiers β the clearest test of whether Bessent’s “C-shaped” narrative eventually shows up in housing. RealtyWire has separately tracked entry-level inventory trends that will factor into whether that segment stabilizes.
