On November 21, 2025, Redfin released data that painted a clear picture of the divided U.S. housing market, revealing contrasting trends in the luxury and non-luxury segments. In October, the luxury housing market—the top 5% of homes by metro price—saw a substantial 5.5% year-over-year increase in its median sale price, pushing the cost of these homes to an average of approximately $1.28 million. This price hike comes as a notable divergence from the slower growth in the non-luxury segment, where homes in the middle 35-65 percentile saw a modest 1.8% rise, bringing the median price to around $373,249.
The stark differences between the two segments point to an emerging “two-tier” market. The luxury market remains resilient, driven largely by affluent buyers who appear less sensitive to the challenges that have been affecting the broader housing market, such as rising mortgage rates and affordability constraints. These buyers continue to push prices upward, undeterred by broader economic pressures, which contrasts sharply with the non-luxury market where price increases have been more subdued. The non-luxury market has also faced significant challenges due to higher mortgage rates, which have made homeownership less attainable for many potential buyers. As mortgage costs rise, more middle-income buyers are being priced out of the market, contributing to slower market activity and dampened demand in this segment.
Interestingly, inventory in both segments showed growth. In the luxury market, the number of available homes increased by 6.4% year-over-year, while in the non-luxury segment, inventory rose by 9.5%. This increase in available homes in the non-luxury market suggests growing supply pressures in the middle-tier housing space, where demand has been weaker due to affordability issues. While more homes are available for buyers, the elevated inventory in the non-luxury sector could lead to greater competition among sellers, which may result in longer times to sell and a need for strategic marketing to attract buyers.
The dynamics of the market also reveal a more significant trend regarding the average time properties remain on the market. Luxury homes are typically taking about 58 days to sell, while non-luxury homes take 45 days on average. While this difference is relatively small, it reflects a broader slowdown in both segments, driven by the extended decision-making process and the growing caution among buyers in light of the current economic climate.
For realtors and brokers, this data suggests that agents working in the non-luxury market may need to adjust their expectations and approach. Given the slower pace of the market and increased competition from higher inventory levels, sellers in the non-luxury space will need to focus on differentiating their properties to stand out. Highlighting unique features, location advantages, or value-added elements will be crucial in attracting the attention of buyers who have become more selective due to affordability constraints. Agents should also advise sellers that it may take longer than usual to find the right buyer, so patience and flexibility will be essential in this competitive environment.
Meanwhile, luxury-market agents can take advantage of the relative strength of their buyer pool, which is increasingly dominated by cash buyers. These buyers tend to be less affected by rising mortgage rates and other affordability pressures, enabling them to push prices upward even in a slower market. As luxury homes remain in demand, the market dynamics will continue to favor properties in prime locations or those with unique, high-end features that command premium prices. For agents in the luxury market, emphasizing these aspects can help attract buyers who are willing to pay above the market rate for distinctive homes that offer superior amenities or exceptional locations.
As the U.S. housing market moves into 2026, these trends are likely to persist. The luxury market will likely continue to be fueled by resilient affluent buyers who are able to weather the broader economic challenges. However, the non-luxury market faces a more uncertain path, as affordability issues persist and may limit the ability of many middle-income buyers to enter the market. Real estate professionals in the non-luxury market will need to adjust their strategies, focusing on differentiating their offerings and managing longer selling timelines.
Overall, the data from Redfin highlights a significant split in the housing market, with luxury homes continuing to see strong demand and rising prices, while non-luxury homes face more headwinds in terms of affordability and competition. As we approach 2026, the market’s two-tier structure will likely remain a defining feature, with each segment requiring different strategies and approaches for success. For buyers, sellers, and real estate professionals alike, understanding these trends and adapting to the evolving market conditions will be critical to navigating the challenges and opportunities that lie ahead.
