The term is being thrown around in the media a lot these days: “K-shaped economy,” which refers to an economy where two elements are heading in opposite directions—usually focused on different income levels.
While this designator can be used to parse out many economic sectors or scenarios, a new Realtor.com® report said the K-shape is showing up in sharply contrasting prospects for buyers at different price points.
According to Realtor.com’s latest Housing Alignment report, the U.S. housing market appears more balanced today as the price gap between listings and buyer interest has narrowed, but a closer examination reveals stark truths.
Price-sensitive homebuyers are being almost entirely priced out of the market as evident by decreases in online home-shopping traffic. The percentage of online home-shopping traffic for starter homes—homes priced below $370,000—has dropped by 11.4% since 2021, going down to 42.6% in 2026.
“This divergence suggests a market bifurcated by buyer financial capacity: luxury shoppers remain financially solid enough to stay actively engaged, while price-sensitive shoppers have become increasingly priced out and disengaged,” the report states.
Generally, the amount of views per property for starter homes has always been above those for $1 million listings, according to Realtor.com, but the report highlights that the gap is shrinking significantly, leaving views per property for both categories at nearly the same levels.
Declines in views, though, can also be partially attributed to shifts in the types of homes available, as the report states that “entry-level inventory is lower than it was in 2019.”
On the other hand, inventory for luxury homes has “grown significantly between 2019 and 2026.” There is other evidence that prospective buyers are struggling with prices both inside and outside of the housing market, as 60% of consumers believe inflation will outpace income growth in the latest consumer sentiment report.
Realtor.com Senior Economist Jiayi Xu notes that the “market is more balanced on the surface, but that balance is not the same as broad-based health,” in a recent statement.
“The narrowing gap between listing share and view share at lower price points is being driven in large part by the retreat of price-sensitive shoppers, not by a meaningful restoration of their buying power,” said Xu.
The gap between listing price and what price buyers are looking at is shrinking. The report uses the median price across views to measure what home price buyers are interested in. The largest gap was previously in 2022, where the median listing price sat around $450,000 and the median price across views was around $410,000.
As of 2026, both those figures now sit around $430,000. This marks a shift for sellers who are beginning to accept more realistic pricing for their homes and a market that is pushing out entry-level buyers.
“In a typical supply-constrained entry-level market, fewer homes for sale would intensify competition for each listing,” Xu said. “Instead, engagement with lower-priced homes has fallen to its lowest level since 2019. The data suggest that many households who would once have competed for these homes are no longer actively shopping at all.”
As pending home sales continue their downward trajectory and builders are reluctant to make strong movements toward increasing housing inventory, the general consensus among economists seems to be that affordability issues are here to stay.
Whether price-sensitive buyers will return if mortgage rates fall or prices moderate is an open question—though the report pointed to previous research suggesting that “potential demand” at those lower price tiers is “sizable.”
